BILL ANALYSIS Ó
SENATE JUDICIARY COMMITTEE
Senator Noreen Evans, Chair
2011-2012 Regular Session
AB 1082 (Gatto)
As Amended May 17, 2011
Hearing Date: June 21, 2011
Fiscal: No
Urgency: No
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SUBJECT
Powers of Attorney: Statutory Form Power of Attorney
DESCRIPTION
Existing law provides two methods under which an individual can
grant authority to another person to make legal and financial
decisions for the individual: (1) a non-form power of attorney;
and (2) a Uniform Statutory Form Power of Attorney (Form POA).
Existing law limits the grant of specific authorities in
non-form powers of attorney. This bill would extend these
limitations on grants of specific authorities to Form POAs.
This bill also would clarify and remove inconsistencies between
the non-form and statutory form powers of attorney.
BACKGROUND
Existing law authorizes an individual to appoint another as his
or her attorney-in-fact or agent to act on his or her behalf in
legal matters. Powers of attorney are particularly useful when
an individual becomes incapacitated or otherwise unable to make
legal and financial decisions for him or herself.
In 1994, the California provisions for powers of attorney were
removed from the Civil Code, reorganized, and recast under the
Probate Code. (SB 1907 (Campbell, Ch. 307, Stats. 2004).) At
that time, the California Law Revision Commission (CLRC), the
sponsor of SB 1907, stated that the reorganization was necessary
because the power of attorney provisions had been inserted
piecemeal throughout the Civil Code. SB 1907 established two
methods of powers of attorney, a non-form power of attorney and
a statutory form power of attorney, with different requirements
(more)
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for each. The state adopted the Form POA to make it easier for
people to execute a power of attorney without incurring the
legal expense of hiring a lawyer for this purpose.
Since 1994, the Form POA has changed little. SB 158 (Machado,
Ch. 251, Stats. 2005) revised the Form POA to remove the
requirement of the principal's Social Security Number to address
increased reports of identity theft. Although the provisions
regarding non-form power of attorney have been revised to
address elder abuse (i.e., limiting inappropriate gifts made by
an attorney-in-fact), the Form POA still does not have the same
protections from potential elder abuse as non-form powers of
attorney.
In 2006, the National Conference of Commissioners on Uniform
State Laws (NCCUSL) adopted the Uniform Power of Attorney Act,
which distinguishes between grants of specific authority that
require express language in a power of attorney and grants of
general authority. NCCUSL modeled the specific grant of
authority provision after California's Probate Code Section
4262, which provides specific grants of authority for non-form
powers of attorney. NCCUSL recognized that assigning powers of
attorney over a principal's property and estate plan can have
devastating consequences to the principal, and certain powers
should be specifically enumerated so that the principal is clear
as to which powers are being granted.
This author-sponsored bill would extend to the Form POA the
protections over grants of authority contained in the non-form
powers of attorney statutes. This bill also would clarify and
remove inconsistencies between the non-form and statutory form
powers of attorney.
CHANGES TO EXISTING LAW
1.Existing law authorizes an individual to appoint another as
his or her attorney-in-fact or agent, to act in his or her
stead in legal matters. (Prob. Code Sec. 4000.)
Existing law provides limits on general and specific powers
that can be granted by an individual to another in a power of
attorney. (Prob. Code Sec. 4200 et seq.)
Existing law provides that a person may use a Form POA to
appoint another as his or her attorney-in-fact or agent, to
act in his or her stead in legal matters. The appointment
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must meet specified requirements and must be executed
according to a prescribed procedure. (Prob. Code Sec. 4400 et
seq.)
Existing law does not apply the same limits on specific grants
of authority in non-form powers of attorney to Form POAs.
(Prob. Code Sec. 4260.)
This bill would provide that the limits on grants of authority
to attorneys-in-fact contained in Probate Code Section 4200 et
seq., with exceptions, would apply to Form POAs.
2.Existing law provides that a power of attorney may not be
construed to grant authority to an attorney-in-fact to perform
any of the following acts unless expressly authorized in the
power of attorney:
create, modify, or revoke a trust;
fund with the principal's property a trust not created by the
principal or a person authorized to create a trust on behalf
of the principal;
make or revoke a gift of the principal's property in trust or
otherwise;
exercise the right to make a disclaimer on behalf of the
principal;
create or change survivorship interests in the principal's
property or in property in which the principal may have an
interest;
designate or change the designation of beneficiaries to
receive any property, benefit, or contract right on the
principal's death; and
make a loan to the attorney-in-fact. (Prob. Code Sec. 4264.)
This bill would add to the list above and require the
individual to expressly grant to the attorney-in-fact the
power to terminate a trust or reject, disclaim, release, or
consent to a reduction in, or modification of, a share in, or
payment from, an estate, trust or other fund on behalf of the
principal.
1.Existing law provides language required to be contained in a
Form POA. (Prob. Code Sec. 4401.)
This bill would specify in the required notice language of the
Form POA that additional powers available under the Probate
Code may be specifically listed on the Form POA.
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2.Existing law provides that, unless there is a conflicting
provision in the statutes governing Form POAs, in which case
the provisions of the Form POA statutes govern, the provisions
regarding non-form powers of attorney apply to Form POAs.
(Prob. Code Sec. 4407.)
This bill would provide that the non-form power of attorney
provisions apply to Form POAs except when there is a
conflicting provision under the Form POA statutes or when a
provision under the non-form power of attorney statutes
expressly states that the provision does not apply to Form
POAs.
3.Existing law provides that a person may grant to an
attorney-in-fact specific authority regarding insurance and
annuity transactions, including the ability to name the
attorney-in-fact as a beneficiary of the insurance or annuity
contract. (Prob. Code Sec. 4457.)
This bill would remove the ability of the attorney-in-fact to
name himself or herself as a beneficiary of an insurance or
annuity.
4.Existing law provides that a person may grant to an
attorney-in fact the ability to accept, reject, disclaim,
receive, receipt for, sell, assign, release, pledge, exchange,
or consent to a reduction in or modification of a share in or
payment from the fund established under a trust, probate
estate, guardianship, conservatorship, escrow, custodianship,
or other fund from which the person is, may become, or claims
to be entitled, as a beneficiary, to a share or payment.
(Prob. Code Sec. 4458.)
This bill would remove the grant of authority to an
attorney-in-fact to reject, disclaim, release, or consent to a
reduction in or modification of a share in or payment from the
fund.
This bill would authorize an attorney-in-fact to disclaim a
detrimental transfer to the person with the approval of the
court.
5.Existing law authorizes an attorney-in-fact to perform various
powers, as specified, with respect to the personal and family
maintenance of the person. (Prob. Code Sec. 4460.)
This bill would add to these specified powers that the
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authority of the attorney-in-fact to provide for the personal
and family maintenance of the person is not dependent upon or
limited by any other grant of authority or limitation to make
gifts on the person's behalf.
6.Existing law provides that, with respect to a retirement plan,
among other things, an attorney-in-fact may be given authority
to designate beneficiaries. (Prob. Code Sec. 4462.)
This bill would delete this provision.
7.Existing law provides that a Form POA does not empower the
agent to modify or revoke a trust created by the principal
unless that power is expressly granted by the power of
attorney. (Prob. Code Sec. 4465.)
This bill would repeal and replace this provision and declare
that the Form POA does not empower the attorney-in-fact to
take any of the actions specified under Probate Code Section
4262 unless the Form POA expressly grants that authority to
the attorney-in-fact.
COMMENT
1. Stated need for the bill
The author writes:
The statutory form power of attorney is sometimes used by
lawyers but is more often used without the assistance of a
lawyer. The common use of a statutory form powers of attorney
without legal advice creates both a greater potential for
abuse by unscrupulous persons and also a greater chance that
the principal may unintentionally grant his or her agent
broader powers than the principal realizes or intends.
The purpose of this bill is to provide the same protections in
a statutory form power of attorney as for all other powers of
attorney under California law to be sure that certain
potentially abusive powers to dispose of the principal's
property during lifetime or at death are not given to an agent
unless the power of attorney expressly grants that power to
the agent.
2. Limiting powers an individual may grant to another under a
Form POA
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This bill would extend current limitations on granting authority
to another person that apply to a non-form power of attorney to
also apply to the Form POA. Existing law provides that certain
powers must be specifically enumerated in a non-form power of
attorney. (Prob. Code Sec. 4264.) Further, existing law
provides that a power of attorney may not authorize an
attorney-in-fact to make, publish, declare, amend, or revoke the
individual's will. (Prob. Code Sec. 4265.)
The Executive Committee of the Trusts and Estates Section of the
State Bar of California (TEXCOM), in support of this bill,
argues that:
California Probate Code ÝSection] 4264 lists certain actions
that are so important, or so subject to possible abuse, that
they cannot be authorized in a power of attorney unless they
are specifically spelled out in the power of attorney
document. These restrictions generally involve the ability to
dispose of the principal's property, such as the ability to
make a gift, to disclaim assets, to make or change a
beneficiary designation . . . or to change survivorship
interests in the principal's property, or to make, amend or
revoke a trust. . . . ÝB]ecause the statutory form power of
attorney is most often used by lay persons without legal
advice, it is particularly important that the simplified
statutory form not grant very broad powers to an agent without
the principal's knowledge or informed consent.
The Form POA provides that an individual granting authority to
an attorney-in-fact may simply initial next to a broad category
of financial and legal transactions in order to transfer power
of authority. These broad categories include real property
transactions, tangible personal property transactions, banking
and other financial institution transactions, and estate, trust,
and other beneficiary transactions. The individual filling out
the Form POA and initialing next to these categories may or may
not have considered the ramifications of authorizing such broad
powers to another.
Certain actions that fall under these broad categories are
transferring real or personal property into a trust created on
behalf of beneficiaries, changing survivorship interests in the
person's property, and making a loan to the attorney-in-fact.
Non-form powers of attorney provide that these specific powers
must be expressly enumerated on the power of attorney to be
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valid. Yet, the Form POA only prohibits an attorney-in-fact
from modifying or revoking the individual's trust. (Prob. Code
Sec. 4266.) Accordingly, under the current Form POA, an
attorney-in-fact could create a trust to be funded with the
individual's real and personal property and name the
attorney-in-fact's relatives as the beneficiaries. The
attorney-in-fact could also loan to himself or herself money
from the individual's bank account. These actions taken by the
attorney-in-fact may or may not have been considered by the
individual when he or she executed the Form POA. This bill
would address these situations by requiring the individual to
specifically list these powers on the Form POA in order for the
attorney-in-fact to take these actions on the individual's
behalf.
A power of attorney is operative when the individual is
incapacitated or unable to make legal and financial decisions.
A layperson filling in the Form POA at the direction of the
proposed attorney-in-fact may be the subject of elder or
dependent adult financial abuse. To provide protection for
these situations, this bill would require, pursuant to the same
limitations as for a non-form power of attorney, express
enumeration in the Form POA in order to grant these specific
powers.
Support : Executive Committee of the Trusts & Estates Section of
the State Bar of California
Opposition : None Known
HISTORY
Source : Author
Related Pending Legislation : None Known
Prior Legislation :
SB 1907 (Campbell, Ch. 307, Stats. 2004) See Background.
SB 158 (Machado, Ch. 251, Stats. 2005) See Background.
Prior Vote :
Assembly Floor (Ayes 78, Noes 0)
Assembly Judiciary Committee (Ayes 10, Noes 0)
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