Dealing with Members Powers of Attorney and Guardianships CUNA Fiduciary Accounts Webinar Series. Introduction POWERS OF ATTORNEY 10/31/2016

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1 Dealing with Members Powers of Attorney and Guardianships CUNA Fiduciary Accounts Webinar Series Frank Drake, Partner Six Forks Road, Suite 400 Raleigh, North Carolina smithdebnamlaw.com Introduction The purpose of this presentation is to education and assist employees of credit unions when confront by a depositor s attorney-in-fact or guardian. Please note that because this presentation is not specific to any particular state, laws may vary where you live and work. Consult local counsel for any issues that may differ from the general/common rules discussed here. 2 POWERS OF ATTORNEY 3 1

2 A power of attorney is an instrument granting someone authority to act as an agent (or attorney-in-fact) for the grantor. 4 The Uniform Law Commission has created a Uniform Power of Attorney Act (UPOAA) in the hopes of creating a consistent law regarding powers of attorney across state lines

3 Powers that are granted to an attorney-infact have to be specifically and individually granted. The grantor may pick and choose which to give to his attorney-in-fact. Some examples include: - Banking transactions - Estate transactions - Tax matters - Gifts 7 Attorneys-in-fact are limited by the powers they are granted. Be wary of those who are unaware of these limitations and try to take advantage of their position. 8 A durable power of attorney is when a person (the principal) designates another as his attorney-in-fact and in writing grants power or authority to the attorney-in-fact which is only effective upon the principal s later incapacity or mental incompetence. 9 3

4 A person who receives a durable power of attorney (like a teller at a credit union) is entitled to rely on an affidavit that shows conclusive proof of incapacity or mental incompetence of the principal. 10 No person dealing in good faith with the attorney-in-fact will be held responsible for any breach of fiduciary duty by the attorneyin-fact. 11 A person is not required to honor the attorneyin-fact s authority or conduct business with the attorney-in-fact if he wouldn t be required to work with the principal under the same circumstances. 12 4

5 Attorneys-in-fact have a variety of duties that they must follow, including: - Acting in accordance with the principal s reasonable expectations - Acting in good faith - Acting only within the scope of authority 13 Powers of attorney can also include any provisions related to the appointment, resignation, removal, or substitution of an attorney-in-fact, and every power of attorney can be revoked. 14 GUARDIANSHIPS AND CONSERVATORSHIPS 15 5

6 Custodians may be designated to receive property that is given to minors in a will, trust, deed, instrument exercising a power of appointment, or in a writing designating a beneficiary of contractual rights. 16 The Uniform Transfers to Minor Act (UTMA) governs property given to minors in almost every state. Under the UTMA, a custodian has all of the rights, powers, and authority over the property that an unmarried adult would have

7 A third person (like a credit union) in good faith and without court order can work with someone who purports to be a custodian and is not responsible for determining the authority of the custodian. 19 The Uniform Guardianship and Protective Proceedings Act (UGPPA) allows a parent/guardian of a minor or incapacitated person, by a power of attorney, to delegate any power regarding car, custody, or property to another person

8 Courts also have the ability to appoint a guardian for a minor or an incapacitated person (including in emergency situations), as long as certain procedures are followed. 22 Guardians should act in the best interests of their ward and exercise reasonable care, diligence, and prudence in making decisions for their ward. Guardians are typically not liable to third persons for acts of their ward. 23 Guardians for minors have the same rights and powers that a parent has. Guardians for incapacitated persons only have power to the extent that it is necessary to supplement the ward s limitations. 24 8

9 The court can also appoint a conservator to exercise power over a minor or incapacitated person s property. A conservator is a fiduciary of the ward and his property and has to observe standards of care when acting on behalf of the ward. 25 Some examples of powers that a conservator holds: - Collect, hold, and retain assets of the estate - Deposit money of the estate in a financial institution - Acquire or dispose of an asset of the estate 26 Conclusion Treat an attorney-in-fact the same way you would treat a member. Be sure to identify the attorney-in-fact and require and retain a complete photocopy of the power of attorney. Remember that the power of attorney does not confer any power or right on the attorney-in-fact that the grantor did not give. The attorney-in-fact can only do what the grantor could do no more, no less. 27 9

10 Thank you! Frank Drake, Partner Six Forks Road, Suite 400 Raleigh, North Carolina smithdebnamlaw.com 28 10