Revised Durable Power of Attorney Act

Many sign a Durable Power of Attorney (DPOA) in order to name an agent to handle their finances in case of future illness or incapacity. On November, 1, 2017, the Texas Legislature revised the Texas Durable Power of Attorney Act. The revisions address a frustrating and common problem encountered by Texans trying to act under a durable power of attorney: third parties (including but especially financial institutions) would often reject a valid durable power of attorney with no explanation or request impossible demands. It was not unheard of for a third party to reject a power of attorney and insist that the principal, the maker of a DPOA, execute another “form” provided by the third party. This, of course, is not possible when the principal has since lost the capacity necessary to execute such a document. The revisions, which apply to all powers of attorney executed before or after that date, take a “stick and carrot” approach to ensuring third parties recognize durable powers of attorney.

The Carrot

The “carrot” is that if a durable power of attorney is accepted by a third party “in good faith and without actual knowledge that the durable power of attorney is void, invalid, or terminated, that the agent’s authority is void, invalid or terminated, or that the agent is exceeding or improperly exercising the agent’s authority, the person may rely on the power of attorney and the agent’s authority as if it were genuine, valid, and still in effect.” Put simply, third parties relying on a durable power of attorney in good faith won’t be held liable if that document later turns out to be invalid.

The Stick

For the “stick”, the Act now provides limited circumstances in which a third party can refuse a power of attorney and a time limitation for doing so. It also allows the third party to request a certification from the agent or an attorney’s opinion on any particular power of attorney. Any third party who does not timely accept or reject a power of attorney, or rejects a power of attorney for an improper reason, can be sued by the agent to compel acceptance by the offending person. That agent is also entitled to recover reasonable and necessary attorneys’ fees.

Additional Revisions

The revisions also change the statutory durable power of attorney form in helpful ways, such as utilizing the term “termination” where it once used “revocation,” which clarified that a principal can terminate an agent’s authority without terminating the authority of other agents appointed under a common power of attorney.

The revisions are a result of an endeavor by Real Estate, Probate, and Trust Law (REPTL) Section of the State Bar of Texas. While the revisions are still fairly new, agents under a durable power of attorney can act with confidence that third parties will accept a valid power of attorney.

 

If you or someone you know has had problems with persons, third parties, or companies accepting a power of attorney, an experienced probate attorney can assist. These situations can often be resolved without the necessity of a lawsuit.


Ryan Sellers | Probate Litigation | Farrow-Gillespie Heath Witter LLP | Dallas, TX

Ryan Sellers’s primary practice areas are probate litigation, guardianship litigation, and probate law. Mr. Sellers joined the firm from his solo practice in Hurst, Texas, where he represented individuals and businesses in a wide variety of civil disputes. He graduated from Baylor Law School in 2014, where he was a member of the Baylor Barrister Society.

 

 

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