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What are Powers of Attorney?

In Texas, you can give another person the ability to handle certain legal affairs for you with documents referred to as “powers of attorney.” Powers of attorney are granted when you, the “principal” sign a document which specifies you are giving another individual (an “agent”) certain powers. Powers of attorney are often used in real estate transactions – to give the agent the ability to sign on behalf of the principal and often used to give the agent authority to handle personal property transactions, stock and bond transactions, bank transactions, business operating matters, claims and litigation, and other matters on behalf of the principal.

What are “Durable” Powers of Attorney?

Generally, powers of attorney terminate in any of the following circumstances: (1) if you specifically cancel (revoke) them, (2) if they have an expiration date, and (3) if you die. Sometimes, a principal wishes to grant powers of attorney that do not terminate when he or she becomes mentally incapacitated. In that case, the person would grant what is called durable powers of attorney. Durable powers of attorney can be used to allow another person to make financial and medical decisions on your behalf in the event of your incapacity.

Changes in the Law: How to Reject Durable Powers of Attorney

The law has recently changed with regard to acceptance or, reliance upon, and rejection of a durable power of attorney. These changes are found in Sections 751.201 and 751.206 of the Texas Estates Code, which are set out below (we have modified, added emphasis, and removed some portions of below for simplicity):

Sec. 751.201. Acceptance of Durable Power of Attorney Required; Exceptions.

(a) Unless one or more grounds for refusal exist (see next section below for the list of grounds to refuse accepting a power of attorney), a person who is presented with and asked to accept a durable power of attorney by an agent with authority to act under the power of attorney shall:
(1) accept the power of attorney; or
(2) before accepting the power of attorney:
(A) request an agent’s certification or an opinion of counsel under not later than the 10th business day after the date the power of attorney is presented, except as provided by Subsection (c); or
(B) if applicable, request an English translation not later than the fifth business day after the date the power of attorney is presented, except as provided by Subsection (c).
(b) Unless one or more grounds for refusal exist and except as provided by Subsection (c), a person who requests:
(1) an agent’s certification must accept the durable power of attorney not later than the seventh business day after the date the person receives the requested certification; and
(2) an opinion of counsel must accept the durable power of attorney not later than the seventh business day after the date the person receives the requested opinion.
(c) An agent presenting a durable power of attorney for acceptance and the person to whom the power of attorney is presented may agree to extend a period prescribed by Subsection (a) or (b).
(d) If an English translation of a durable power of attorney is requested as authorized by Subsection (a)(2)(B), the power of attorney is not considered presented for acceptance under Subsection (a) until the date the requestor receives the translation. On and after that date, the power of attorney shall be treated as a power of attorney originally prepared in English for all the purposes of this subchapter.
(e) A person is not required to accept a durable power of attorney under this section if the agent refuses to or does not provide a requested certification, opinion of counsel, or English translation under this subchapter.
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Sec. 751.206. Grounds for Refusing Acceptance.

A person is not required to accept a durable power of attorney under this subchapter if:
(1) the person would not otherwise be required to engage in a transaction with the principal under the same circumstances, including a circumstance in which the agent seeks to:
(A) establish a customer relationship with the person under the power of attorney when the principal is not already a customer of the person or expand an existing customer relationship with the person under the power of attorney; or
(B) acquire a product or service under the power of attorney that the person does not offer;
(2) the person’s engaging in the transaction with the agent or with the principal under the same circumstances would be inconsistent with:
(A) another law of this state or a federal statute, rule, or regulation;
(B) a request from a law enforcement agency; or
(C) a policy adopted by the person in good faith that is necessary to comply with another law of this state or a federal statute, rule, regulation, regulatory directive, guidance, or executive order applicable to the person;
(3) the person would not engage in a similar transaction with the agent because the person or an affiliate of the person:
(A) has filed a suspicious activity report as described by 31 U.S.C. Section 5318(g) with respect to the principal or agent;
(B) believes in good faith that the principal or agent has a prior criminal history involving financial crimes; or
(C) has had a previous, unsatisfactory business relationship with the agent due to or resulting in:
(i) material loss to the person;
(ii) financial mismanagement by the agent;
(iii) litigation between the person and the agent alleging substantial damages; or
(iv) multiple nuisance lawsuits filed by the agent;
(4) the person has actual knowledge of the termination of the agent’s authority or of the power of attorney before an agent’s exercise of authority under the power of attorney;
(5) the agent refuses to comply with a request for a certification, opinion of counsel, or translation under Section 751.201 or, if the agent complies with one or more of those requests, the requestor in good faith is unable to determine the validity of the power of attorney or the agent’s authority to act under the power of attorney because the certification, opinion, or translation is incorrect, incomplete, unclear, limited, qualified, or otherwise deficient in a manner that makes the certification, opinion, or translation ineffective for its intended purpose, as determined in good faith by the requestor;
(6) regardless of whether an agent’s certification, opinion of counsel, or translation has been requested or received by the person under this subchapter, the person believes in good faith that:
(A) the power of attorney is not valid;
(B) the agent does not have the authority to act as attempted; or
(C) the performance of the requested act would violate the terms of:
(i) a business entity’s governing documents; or
(ii) an agreement affecting a business entity, including how the entity’s business is conducted;
(7) the person commenced, or has actual knowledge that another person commenced, a judicial proceeding to construe the power of attorney or review the agent’s conduct and that proceeding is pending;
(8) the person commenced, or has actual knowledge that another person commenced, a judicial proceeding for which a final determination was made that found:
(A) the power of attorney invalid with respect to a purpose for which the power of attorney is being presented for acceptance; or
(B) the agent lacked the authority to act in the same manner in which the agent is attempting to act under the power of attorney;
(9) the person makes, has made, or has actual knowledge that another person has made a report to a law enforcement agency or other federal or state agency, including the Department of Family and Protective Services, stating a good faith belief that the principal may be subject to physical or financial abuse, neglect, exploitation, or abandonment by the agent or a person acting with or on behalf of the agent;
(10) the person receives conflicting instructions or communications with regard to a matter from co-agents acting under the same power of attorney or from agents acting under different powers of attorney signed by the same principal or another adult acting for the principal as authorized by Section 751.0021, provided that the person may refuse to accept the power of attorney only with respect to that matter; or
(11) the person is not required to accept the durable power of attorney by the law of the jurisdiction that applies in determining the power of attorney’s meaning and effect, or the powers conferred under the durable power of attorney that the agent is attempting to exercise are not included within the scope of activities to which the law of that jurisdiction applies.

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The Takeaway: If an agent under a durable power of attorney presents you with and request you to accept a durable power of attorney, please be aware of the recent changes in law and your rights surrounding the acceptance or rejection of the power of attorney.

– The Business Team
Scott | Josh | Jeremy

The Allen Firm, PC
181 S. Graham Street | Stephenville, Texas 76401
Ph: 254.965.3185 | Fax: 254.965.6539

 

The Allen Firm, PC is composed of a team of attorneys located in Stephenville, Texas. Our mission is to improve people’s lives by providing reliable and practical help with their legal matters while operating under our values of honoring people, operating with integrity and striving for excellence. We offer help in forming businesses or companies, estate planning, lawsuits, real estate, probate, oil and gas, collections, agriculture, bankruptcy, family law, and accident and injuries.

 

*This article has been written and provided for educational purposes in an attempt to provide the reader with a general understanding of the particular topic and area of law covered in this Article.  It is not to be relied upon for any purpose.  The reader acknowledges the underlying analysis and legal conclusions referenced in this Article may be inaccurate by the changing of the law or by a controlling court opinion to the contrary.  No attorney-client relationship exists until an appropriate engagement letter has been signed. Contact our Firm to discuss how the contents of this Article may apply to your specific situation.

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