As of April 17th 2014, Governor Abercrombie signed a bill into law establishing the new Uniform Power of Attorney Act.  It may be a little confusing to people because there already was a Hawaii law allowing powers of attorney, and the old law was called the Uniform Durable Power of Attorney Act.  What did they accomplish besides taking the word “Durable” out of the law? And does this now mean that Powers of Attorney can’t be Durable anymore? And what does Durable even mean in the context of a Power of Attorney? (Or for that matter, what is a Power of Attorney?)  I will put all these questions to rest for you today.

A Power of Attorney is a document that someone can sign allowing someone else to have authority to manage her finances and sign legal documents for her. The person signing the power of attorney is called the “Principal.”  The person who has authority to manage finances, sign documents, and otherwise act on the Principal’s behalf is called the “Agent” or the “Attorney-in-Fact.”  This doesn’t mean that the Agent has to be a lawyer.  A lawyer is an “Attorney-at-Law,” which means she can represent you in court as to matters of law.  An “Attorney-in-Fact” does not represent you in court before a judge, but can represent you in other matters such as opening and closing bank accounts, depositing and withdrawing money, signing contracts, purchasing and selling real estate, buying and selling stocks, or anything else that you could do yourself if you were present.

When you have a Power of Attorney that continues to be valid even after you become incapacitated, we call it “Durable” because it lasts or endures even through your incapacity.  Even though the title of the new law doesn’t have the word “Durable” in it anymore, you can still make a Durable Power of Attorney.

All Powers of Attorney become invalid when the Principal passes away.  In other words, even if you have a Power of Attorney for someone, it’s illegal to use it to sign for them or act on their behalf after they die.  Once a Principal has passed away, you might need to open a Probate with the court to appoint a Personal Representative who will receive authority from the judge to sign and act on behalf of the deceased Principal and manage his or her assets.

As a Principal, you always have the right to revoke or cancel your Power of Attorney to stop your Agent from acting on your behalf as long as you’re still competent. You may also appoint a new Attorney-in-Fact (or Agent) at any time.

There are quite a few changes in the new Uniform Power of Attorney Act and overall, I think they are quite good and advantageous to our clients.  I will spare you from all the legal details as the Act is 76 pages long and took many long hours of study to understand properly.  However, one of the biggest advantages of the new act is that it doesn’t allow 3rd parties to arbitrarily refuse to accept the Power of Attorney.  Some of our clients have experienced going to a major bank with a valid Power of Attorney or trying to sell a piece of property on behalf of an incapacitated family member, and found out that the bank or the escrow company would not accept the Power of Attorney.  It has been a major point of frustration.  They did everything correctly, their lawyer did everything correctly, the Power of Attorney was properly drafted, but for some unknown reason the financial institution just decided not to honor the Power of Attorney.  And this is not just with our law firm’s clients.  Almost everyone in the State who has tried to use a Power of Attorney for managing someone’s affairs has found that there are some institutions that just will not cooperate.  Thankfully, many Credit Unions have been more helpful with accepting a Power of Attorney than most of the banks have been.  Well, with this new law, these banks, escrow companies, and other financial institutions are all obligated to accept and honor a Power of Attorney unless they reasonably suspect fraud or something else improper is going on.  If they do refuse to honor a Power of Attorney without a reasonable explanation, they will be liable in court for your attorney’s fees when you sue to force them to honor it.  And they can’t just refuse to accept is because it’s old or “stale” anymore.  There are a number of other great improvements that come with this new law, but I think this is the most immediately useful improvement for our clients.

So, come in to the office and have your new Power of Attorney prepared in accordance with the new law.  You might never have to redo your Power of Attorney ever again.  (At least as long as you never want to change who you name as your Agents.)