Powers of Attorney

A power of attorney creates an agency relationship between a principal (the person giving power) and an agent (the person receiving power), and is governed by O.C.G.A. § 10-6B-1 et seq. A good way to understand powers of attorney is to think of them like keys; they give you power to deal with third parties the same way keys give you the ability to open locks. The purpose of this power is to help the person who gave you the power of attorney. A power of attorney, however is not like a guardianship or conservatorship. It is a voluntary relationship and does not give the agent authority to overrule the principal.

The relation of principal and agent arises wherever one person, expressly or by implication, authorizes another to act for him or subsequently ratifies the acts of another in his behalf. An agency relationship authorizing actions that must be taken in writing must also be created in writing. In other words, almost every agency relationship relating to finances must have a written power of attorney or agency agreement. Powers of attorney created on or after July 1, 2017, are subject to the Georgia Power of Attorney Act, O.C.G.A. § 10-6B-1 et seq. Powers of attorney created prior to that date remain effective.

Any person of sound mind may be appointed as agent. Anything one person may do may be done by an agent, except personal trusts in which special confidence was placed in the principal. For example, an agent under a power of attorney could not take over for the principal and act as guardian or conservator. An agent may not delegate authority to act unless specially empowered to do so.

A conditional power of attorney (or “springing power”) is not effective until the specified event occurs. A power of attorney containing a conditional designation becomes effective when the specified event or contingency has occurred. If a springing power of attorney is triggered by a medical condition, O.C.G.A. § 10-6B-9(d) grants the person authorized to make a capacity determination authority to obtain access to the principal’s health care information and communicate with the principal’s health care provider. The statute also grants an agent with general authority over personal decisions authority under HIPAA to make payments for the provision of health care. O.C.G.A. § 10-6B-52(a)(5).

If an agent signs merely using the word “agent” then the agent may liable. The correct form identifies the principal for whom the agent is acting, such as

“John Smith, by Mary Smith as Attorney in Fact.”

Agents are required to keep regular accounts (records) with supporting documentation.

An agency relationship is revocable at the will of the principal, and unless the agency is coupled with an interest, it is automatically revoked upon the death of the principal or the agent.

In Georgia, all powers of attorney are presumed to be durable. O.C.G.A. § 10-6B-4. A written power of attorney, unless expressly providing otherwise, shall not be terminated by the incompetency or incapacity of the principal. The power to act as an attorney in fact for a principal who subsequently becomes incompetent or incapacitated shall remain in force until such time as a conservator or receiver shall be appointed for the principal or until some other judicial proceeding shall terminate the power.

Where an agent is authorized to take action, his or her authority is construed to include all necessary and usual means for effectually executing it.

Principals are bound by the actions of their agents unless the agent exceeds his or her authority. If the agent exceeds his or her authority, the principal must either ratify the entire transaction or repudiate the entire transaction. If the principal ratifies the transaction, it relates back to the original act; a ratification once made cannot be revoked.

A statutory form for Financial Power of Attorney appears at O.C.G.A. § 10-6B-70. Copies have the same effect as an original. O.C.G.A. § 10-6B-6(c).

In LeCraw v. LeCraw, 261 Ga. 98 (1991), the Georgia Supreme Court construed a power of attorney and found that it authorized a continued pattern of gifting. After an audit, the IRS took the position that the power of attorney did not authorize gifting. It did, however, authorize making withdrawals from checking accounts, savings accounts, and did authorize the agent to “do any other thing or perform any other act, not limited to the foregoing, which I might do in person, it being intended that this shall be a general power of attorney.” In finding that the power of attorney authorized gifting, the trial court found that Mrs. LeCraw’s agents were continuing a pattern of gifting designed to minimize her transfer tax liability. It also found that she knew about the gifting by her agents, voiced no objection and that she understood tax planning. After finding virtually no Georgia authority on the matter, the trial court found that the power of attorney authorized the gifts based on Mrs. LeCraw’s intent in creating the agency. On appeal the Georgia Supreme Court agreed. The Supreme Court held:

Where, as here, the grantor of the power of attorney expresses in that document the desires that her business be transacted by her attorneys-in-fact and that the power of attorney be a general power, and the evidence is undisputed that the actions taken by the attorneys-in-fact, unobjected to by the grantor, continue the grantor’s practice of giving monetary gifts to the natural objects of her bounty and affection; that the exercise of the power to make gratuitous transfers by the attorneys-in-fact does not deplete the grantor of the assets necessary for her to live her accustomed life-style; and that the exercise of the power to make gifts to the natural objects of her bounty minimizes the estate transfer tax, a goal the grantor desired, we construe the general power of attorney executed by the grantor to include within it the power to make gratuitous transfers of property to the natural objects of the grantor’s bounty.

In Bradshaw v. McNeill, 228 Ga. App. 653 (1997), an agent was found to have exceeded her authority under a power of attorney. Carol Bradshaw was sued for fraud and undue influence relating to her conduct on behalf of her aunt. Dorothy Harris, the principal, added Bradshaw to a number of accounts after her husband died. Harris’ will devised her estate in equal shares to Bradshaw and McNeill. A month prior to Harris’ death, Bradshaw accompanied Harris to an attorney where the remainder interest in Harris’ home was deeded to Bradshaw. When Harris was admitted to a nursing home, Bradshaw withdrew funds in Harris’ non-joint bank accounts and deposited them into new joint accounts with Bradshaw. Harris died the following day. The power of attorney Bradshaw used authorized her to close out checking or savings accounts and to open new accounts. However, it also specified that any such action was to be taken on behalf of Harris. In light of [prior law of agency in Chapter 6, now O.C.G.A. §§ 10-6-14; 10-6-5], which prohibit agents from using a power of attorney to benefit themselves to the detriment of their agent, the Court found that a jury question remained as to whether Bradshaw’s conduct was on behalf of Harris. The Court distinguished LeCraw where the principal had time and opportunity to ratify the agent’s conduct.

In Keith v. Alexander Underwriters Gen. Agency, 219 Ga. App. 36 (1995), the Court of Appeals examined a power of attorney which permitted an agent to operate an insurance business. In doing so, it rejected the argument that the agent had authority to file a pro se action on behalf of his principal.

“[A] formal power of attorney is subject to a strict construction,’ and ‘general terms in it are restricted to consistency with the controlling purpose . . .’ [cits.], yet . . . ‘the agent’s authority shall be construed to include all necessary and usual means for effectually executing it.’ LeCraw v. LeCraw, 261 Ga. 98, 99 (401 S.E.2d 697) (1991). The power of attorney was patently given to allow Latzak to operate the insurance agency. It contains no specific authority to accept service for her or to represent her in a suit against her. The general terms do not implicate such authority either; the power to make a response in a personal suit would be far beyond what would be needed to operate Keith’s insurance business.”

In Nat’l Treasury Emples. Union v. Macon-Bibb County Hosp. Auth., 230 Ga. App. 448 (1998), the Court of Appeals rejected a claim that the Hospital, as agent, had a duty to know the contents of an insurance contract. The Court noted that the power of attorney in that case was a limited one. It did not purport to assign all of the principal’s rights and benefits.; it simply had authority to complete any forms or releases required to obtain assigned insurance benefits. Since the hospital did not have a general power of attorney, it did not stand in the principal’s shoes.

In Life Care Ctrs of Am. v. Smith, 298 Ga. App. 739 (2009), the Court of Appeals held that a power of attorney for health care did not give an agent authority to execute an arbitration agreement. “Although Life Care argues that the power of attorney states that the power granted is intended to be as broad as possible, that broad grant of power is ‘so that your agent will have authority to make any decision you could make to obtain or terminate any type of health care. . . .’ We note that the agreement to arbitrate was optional and it is not contended in this case that in order for Petereit to be admitted to Life Care, Smith was required to sign the agreement to arbitrate.”

Powers of attorney terminate upon the death of the principal. After the principal’s death, probate is necessary to continue acting for the deceased principal.

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