Every credit union is from time to time be presented with a power of attorney for one of its members. Powers of attorney are simple in concept — they allow a principal (the member) to appoint an agent to transact business on his or her behalf. In practice, however, questions often arise when accepting powers of attorney. Here are some things a credit union should check when presented with a power of attorney:
1. Is the power of attorney subject to the Uniform Power of Attorney Act? In an effort to make state laws more consistent with one another, many states have adopted the Uniform Power of Attorney Act (UPOA). The UPOA provides default provisions that apply to all powers of attorney in the absence of specific language in the document to the contrary. Currently, 22 states have adopted the UPOA. While the specific state UPOA statutes are intended to provide consistency, there may be some variations between states. Therefore, it is still important to review that UPOA adopted by the particular state for the power of attorney you are reviewing. References to UPOA provisions below relate to standard provisions, but, again, specific states may deviate from this.
2. Confirm that the power of attorney is signed. All written powers of attorney must be signed by the principal. Not all states, however, require powers of attorney to be notarized. Those states that have adopted the UPOA, however, provide additional protections to credit unions if a power of attorney is notarized. Specifically, a credit union is allowed to rely upon a notarized power of attorney as valid and that the agent is not exceeding or improperly exercising the agent's authority unless the credit union has actual knowledge to the contrary.
3. Identify the agent(s). While this appears simple, it can raise some questions. First, read the document. If there is only one primary agent, then the process simple. If there are co-agents or the primary agent(s) are not able or willing to act and successor agent(s) are acting, then some additional verification is required. If co-agents are named, the document may specifically provide how many agents are required to act. The UPOA provides a default provision that any co-agent may act individually unless the document provides otherwise.
For states that have not adopted the UPOA, absent specific language in the document, a majority should be required to act. If a successor agent is acting, then the credit union must verify that the contingency triggering the successor’s authority (e.g., incapacity of the principal agent) has occurred. The UPOA permits credit unions to rely on a certification signed by the agent to certify whether any contingencies have occurred. Even in states that have not adopted the UPOA, it is a good practice to have the agent sign a certification, which can be drafted to provide additional protections for the credit union.
4. Confirm the powers of the agent. Powers of attorney may be limited or general. Limited powers of attorney limit the agent’s power to specific powers listed in the document. A general power of attorney is much broader, but still may require certain powers, such as changing beneficiary designations to be specifically listed. Typically the title of the document states whether it is a limited or general power of attorney. General powers of attorney will usually contain a general statement about the agent’s authority, such as “the agent shall have authority to do all acts that a principal could do.” The UPOA lists numerous powers held by agents under general powers of attorney and some states have short form powers of attorney that are more or less “check the box.” Thus, it can be difficult to determine what powers have been granted without reference to a state’s power of attorney statute.
5. Is a copy acceptable? For states that have adopted the UPOA, the statute specifically permits reliance on photocopies. For states that have not adopted the UPOA, the power of attorney should specifically permit reliance on a photocopy before a copy is accepted.
While the items mentioned above will address many of the questions that can arise when handling powers of attorney, there will undoubtedly be times where some ambiguity remains. When in doubt, always seek guidance from an attorney.
Alexander Powell, Member, Kaufman & Canoles
Alexander W. Powell Jr. is a Member at Kaufman & Canoles His practice focuses on estate planning and administration, tax, and real estate development and land use. He can be reached at (757) 259.3877 or firstname.lastname@example.org.
The Kaufman & Canoles Credit Union Team serves as general counsel to credit unions, large and small, regularly advising clients on consumer compliance issues, NCUA requirements, and the rules governing credit union service organizations. For more information about our team visit www.kaufcan.com.