Civil Law, Estate Planning

How does an Arkansas Power of Attorney Work?

We often deal with clients who need an estate plan, but don’t realize they need what’s called a “power of attorney.” One of the main questions we ask when we draft estate plans is, “who do you want to take care of your money when you can’t do it yourself?” This is a hard question for most people to answer. A little explanation: 1) the person giving the power of attorney is the principal and the person who is appointed as power of attorney is the agent or attorney-in-fact. Now for the stuff you want to know:

Does My Power of Attorney Have Control of My Affairs Right Now?

This question is both a yes and no. You can have an immediate power of attorney, and it is exactly what it sounds like – it is effective as soon as you sign it. You can also have a “springing” power of attorney. A springing power of attorney “springs” into effect when an certain event occurs. This is typically when you lose capacity (you can’t make decisions for yourself anymore). When we draft springing power of attorneys we typically make them spring into effect when you lose capacity. We define you losing capacity as when one of the following happens: 1) two independent doctors declare you incapacitated, 2) a court declares you incapacitated, or 3) you disappear for 30 days.  See Ark. Code Ann. § 28-68-109.

Always remember your power of attorney is your agent, that is – they have to do what you tell them. You do not have to do what they tell you.

When does My Power of Attorney Lose Control?

Your power of attorney can lose their power when one of several events occur: 1) the power of attorney ends based on a specific date in the document, 2) a guardianship over you is established, 3) the power of attorney is revoked, or 4) a court removes the power of attorney.

When does a power of Attorney End?

A power of attorney can end for several reasons. The first is that you put an end date on the power of attorney. Such as “This power of attorney is valid until January 1, 2045.” On January 2, 2045, that power of attorney is no longer valid. If a power of attorney is not durable it will end when you lose capacity.

If the power of attorney was for a limited reason, it will end when the need for the power of attorney is over. For instance, a husband and wife are buying a house and the wife is out of town when the title company schedules the closing. The wife can sign a power of attorney ahead of time granting the husband the authority to close on the house and nothing else. The power of attorney would end after the closing was completed.

See Ark. Code Ann. § 28-68-110.

If I have power of attorney, why did someone file for guardianship?

When family members are fighting over power of attorney, one of them might eventually file for guardianship. If a court appoints a guardian, this will typically override the power of attorney and the guardian will take control of the person’s assets.

When and How do I revoke a power of attorney?

You are the principal of the power of attorney and can revoke most powers of attorneys whenever you want – as long as you still have capacity. You can also revoke a power of attorney by signing a new power of attorney. This only works if the new power of attorney states “all previously executed power of attorneys are hereby revoked.” If the new power of attorney does not have that statement in it, the old one stays in effect until you execute a revocation of that power of attorney.

Can my Power of Attorney Quit?

Yes. The agent may resign by giving the principal notice. If the principal in incapacitated they can resign by giving conservator or guardian notice (these are court appointed positions, so if you did not go to court, you are not a guardian or conservator). If the principal is incapacitated and there is no conservator or guardian, then the principal’s caregiver or someone else that demonstrates a sufficient interest in the principal’s welfare, or a government agency having the authority to protect the principal’s welfare, may be appointed guardian. See Ark. Code Ann. 28-68-118.

What is a Durable Power of Attorney?

A durable power of attorney is one that stays in effect when the principal becomes incapacitated. So, if you have a durable power of attorney and become incapacitated, it stays in effect. If it is not durable and you become incapacitated, it ends. Under Arkansas law, a power of attorney created under this chapter is durable unless it expressly provides that it is terminated by the incapacity of the principal. See Ark. Code Ann. § 28-68-104.

Can my Power of Attorney override me?

No, as long as you have capacity. The power of attorney is your agent. As long as you are competent, the power of attorney cannot force you to do anything. The power of attorney has to act for your benefit and in your best interests. They have to act within the authority granted in the power of attorney, so the language and powers granted to your agent in the document are very important. If you have lost capacity, then the power of attorney can make decisions for you and without your consent. The reason for this is because if you have lost competency, then the law views you as unable to make your own decisions.

Does my power of attorney have to tell any about what they have done, keep records, and be accountable?

Yes. A power of attorney must keep a record of all receipts, payments, disbursements, and transactions made on behalf of the principal. See Ark Code Ann. § 28-67-114(a)(4).

An agent is required to act in your best interests. If they do not act in your best interests, then someone else who is interested can sue them.

Who has the right to bring a court case against a power of attorney?

If someone believes that an agent is not acting correctly under a power of attorney, then certain people can ask a court to look at what the agent has done.

Those people are:

  • The principal (person who granted power of attorney) or the agent (the person acting as power of attorney);
  • A guardian or conservator (these are court appointed positions, so if you did not go to court, you are not a guardian or conservator);
  • Other fiduciary (this could be a trustee or any person who has a fiduciary duty to the principal);
  • A person authorized to make healthcare decisions for the principal;
  • The principal’s spouse, parent, or descendent (child, grandchild, etc.)
  • An heir of the principal (a person who would inherit from the principal as a matter of law);
  • A beneficiary of the principal (you are named as a beneficiary in some way – could be a will, payable on death beneficiary for a bank account, transfer on death beneficiary, etc.)
  • A governmental agency overseeing the principal;
  • The principal’s caregiver or someone else that demonstrates a sufficient interest in the principal’s welfare;
  • A person that is asked to accept a power of attorney (who you are trying to use the power of attorney on – a bank, insurance company, etc.)

See Ark. Code Ann. § 28-65-116.

Is the Power of Attorney Liable for what they do wrong?

Yes. An agent that violates the law or the power of attorney is liable to the principal or the principals heirs for 1) paying back the value of the principal’s property so that it is back to where it would have been if they did not violate the law, and 2) reimburse the principal or heirs for attorney’s fees and costs paid on the agent’s behalf. See Ark. Code Ann. § 28-68-117.

Does the Bank have to accept my Power of Attorney?

Yes. A person or institution can accept and rely on an “acknowledged” (notarized) power of attorney. If they accept the power of attorney in good faith and without actual knowledge that the signature is not genuine then they have no liability. That means if a power of attorney is fake, but the bank doesn’t know, they can’t get in trouble for allowing the fake power of attorney to use the principal’s funds.  The same goes for a power of attorney that is void or terminated.

What if someone refuses to accept my power of Attorney?

If someone refuses to accept the statutory form power of attorney, then you have some remedies. After they refuse to accept it, they have 7 business days to request a certification that it is valid, a translation, or an opinion of a lawyer.

If the do not request any of the above, then on the 8th business day they are liable for attorney’s fees and costs for a court action forcing them to accept it.

If they do request a certification that it is valid, a translation, or an opinion of a lawyer, it must be provided, and they must accept the power of attorney five business days after it is provided. If they do not accept it, then on the 6th business day they are liable for attorney’s fees and costs for a court action forcing them to accept it. See Ark. Code Ann. § 28-68-120.

You may be more confused than you were when you started reading this.  We understand that these situations can be very confusing, and we would be happy to help you work through whatever problem you may have concerning a power of attorney.  If you have questions about an Arkansas Power of Attorney, give us a call today and we can schedule your free consultation.

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