Change in Maine Law Regarding Liability of an Agent Serving Under a Financial Power of Attorney
November 17th, 2015
In a financial power of attorney, one person (the principal) gives another person (the agent) the authority to manage the principal’s property and to make financial decisions for the principal. A financial power of attorney (FPOA) is a very powerful document. An expansive FPOA may give the agent authority that is as broad as or broader than could be granted in a conservatorship order. This can avoid the need for a conservatorship, if the principal ever became incapacitated, although the principal may nominate the agent in the FPOA to serve as conservator in case one is ever needed. Having a FPOA also avoids the need to name a child as a joint owner on a bank account, which subjects the account to the child’s creditors and can disrupt the parent’s estate plan. Also, a FPOA may include expansive powers that allow an agent to protect the principal’s assets if the principal needs to apply for long-term care assistance under the MaineCare program. Although FPOAs may be drafted in different ways, given all these potential benefits, estate planning and elder law attorneys will generally urge clients to have a FPOA. Until recently, agents’ duties have primarily included responsibilties like acting loyally for the principal’s benefit, keeping records of all transactions done on behalf of the principal, and attempting to preserve the principal’s estate plan. 18-A M.R.S. § 914. When naming an agent, clients often consider the agent’s trustworthiness and logistical ability to serve. Until now, there has been little to discuss about the effect on the agent of being named as an agent under a FPOA beyond how much time may be involved and confirming that the agent may be reimbursed for the agent’s time and expenses. This is primarily because, under the Uniform Power of Attorney Act, which Maine adopted in 2010, a principal may include a provision in a FPOA that exonerates the agent for breach of the agent’s duties unless the breach was done dishonestly, with an improper motive, or with reckless indifference, or if the provision on exoneration was inserted in the FPOA through an abuse of a confidential or fiduciary relationship with the principal. 18-A M.R.S. § 5-915. The effect of being named as an agent under a FPOA recently changed due to the passage of “An Act to Further Define Duties for Persons Who Hold Powers of Attorney or Act as Agents for Residents of Long-term Care Facilities.” The general thrust of the Act is to impose greater duties and liabilities upon nursing homes, assisted living facilities, and agents to ensure that facilities are paid for services the principal receives and that the principal promptly applies for MaineCare long-term care financial assistance, if needed. In particular, nursing home and assisted living facility contracts must include that:
- The resident or resident’s agent must make timely payment to the facility from the resident’s resources;
- If the facility believes that the resident of the facility financially qualifies for MaineCare, it must assist the resident or the resident’s agent in completing and filing a MaineCare application;
- The resident or resident’s agent must notify the facility when the resident or resident’s agent has reason to believe the resident financially qualifies for MaineCare and timely file an application or assist the facility in filing an application; and
- If the resident’s agent fails in his or her obligation to fulfil these duties, the facility may file a lawsuit in the Probate Court or state District Court for review of the agent’s performance and request attorney fees and costs from the agent.