S1771. Establishes the "General Durable Power of Attorney Act."

New Jersey Legislature. 2012-2013 Regular Session. Senate.

Introduced:
Mar 8, 2012
Last Action:
Mar 8, 2012
Introduced in the Senate, Referred to Senate Judiciary Committee
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History

Mar 8, 2012: Introduced in the Senate, Referred to Senate Judiciary Committee

Summary

This legislation is based upon recommendations of the New Jersey Law Revision Commission, ("the NJLRC"), in a published report entitled "Revised Final Report Relating to General Durable Power of Attorney Act" ("the report"), dated September 17, 2010. The introduction to the report declares that in 2006, the National Conference of Commissioners on Uniform State Laws, approved and recommended for enactment in all states the Uniform Power of Attorney Act (UPOAA), in response to a national review of state power of attorney legislation. Based upon that uniform enactment, and a comprehensive review of recent amendments to the New York durable power of attorney law, Laws 2008, ch. 644, (signed into law as Chapter 4 of the Laws of 2009, amending the General Obligations Law (Chapter 644)), ("Chapter 644"). the NJLRC was prompted to evaluate the need for revision to the current New Jersey power of attorney statutes, Title 46:2B-8.1 through 46:2B-8.14. Known as the Revised Durable Power of Attorney Act ("the RDPAA"), this law was enacted in 2000, replacing an earlier New Jersey power of attorney law. Section 1. This section declares that the act shall be known and may be cited as, the "General Durable Power of Attorney Act." The NJLRC declares in the report that the sole reason for a change in the name of the act is to distinguish the current law from the proposed revised law. This new act combines elements of the current Revised Durable Power of Attorney Act with elements of the statutes pertaining to banking power of attorneys and adds new elements adopted from other sources as noted. Section 2. The definitions section is new. Some of the definitions are adopted from current section 46:2B-10; some are extrapolated from current section 46:2B-8.2; some from, Chapter 644, and some from UPOAA. The definition of "durable" is derived in part from source section 46:2B-8.2, and the definition of "incapacity of the principal" is adopted from the definition of "incapacitated individual" in Title 3B. The term "incapacity" is no longer coupled with the term "disability" as in the current act because disability does not necessarily render someone incapable of property and business management. The term "disability," however, is included within the definition of incapacity of the principal and its meaning is consistent with Title 3B. The definition of "capacity of the principal to execute a power of attorney" has been added to clarify that a principal who may be incapacitated for purposes of durability of the power nonetheless may have had the capacity to make the power of attorney. The term "agent," which is used in the current statute governing banking powers of attorney, is now used here to replace the term "attorney-in-fact" to avoid confusion by the public about the meaning of the term and the differences between an attorney-in-fact and an attorney-at-law. The term "account" is used in the current statute governing banking powers but has been modified to include financial institutions as well as banking institutions. The term "safety deposit company" is used in the current statute governing banking powers. The term "signature" is adopted from current N.J.S. 46:14-4.2. Section 3. This is a new provision, recognizes the validity, enforceability and revocation of durable powers of attorney created prior to enactment of the proposed new law. Section 4. This is a proposed new section, concerning the applicability of the act, is substantially derived from the UPOAA, and, suggestions raised as a result of recent amendments to the New York statute. Pertinent provisions of this section are summarized: Paragraph (2) of subsection a. excludes from the act a proxy or other delegation to exercise voting rights or management rights with respect to an entity. It is adopted from the UPOAA. Paragraph (5) of subsection a. is adopted from the UPOAA and, addresses situations where, "due to the agent's interest in the subject matter of the power, the agent is not intended to act as the principal's fiduciary. . . ." Paragraph (6) of subsection a. clarifies that the act applies only to powers of attorney made by natural persons. Paragraph (7) of subsection a. excludes from the act a grant of limited authority that does not require the authorized person to use any discretion. Such limited authority, includes, but is not limited to, the power to accept service of pleadings or other documents on the principal's behalf, or the authority to sign a document, such as a deed or contract, on behalf of the principal in connection with a transaction, or a stock power which by it terms appoints an attorney in fact solely to effect the transfer on the books of the issuer. Paragraph (8) of subsection a. excludes from the act any power contained within an agreement governing the internal affairs of a corporation, limited liability company, partnership or cooperative or condominium association, including, but not limited to, a shareholder agreement, partnership agreement, limited liability company operating agreement, or an offering plan, bylaws or declaration of condominium. Paragraph (10) of subsection a. is a "catchall" provision to cover a myriad of other documents, or provisions in documents, designated as "powers of attorney" though not contemplated or intended to be governed by this act. An example would be a discretionary brokerage account agreement or a trading authorization agreement. Subsection b. of this section permits a principal to expressly provide in a power of attorney that the power of attorney is governed by this act regardless of whether this act would apply to the power of attorney. Section 5. The source sections are merged and modified in this new section. The terms "durable" and "incapacity of the principal" are now defined in proposed section 46:2B-20.2. Subsection a. is modeled on Section 104 of the UPOAA. Subsection b. is modeled on source provision N.J.S. 46:2B-8.3 and 46:2B-16 pertaining to banking institutions. Unlike the current act -- which provides that in order to be durable, the power of attorney must recite certain language showing the principal's intent to make it so -- the new act now provides that a power of attorney is durable unless otherwise stated. This is based on the belief -- as articulated in the s to the UPOAA -- that most principals prefer that a power be durable to hedge against the need for guardianship. The second sentence of subsection a. is added because third parties, especially those unfamiliar with New Jersey law or those without access to our statutes, may not be aware of the durability (unless otherwise stated) conferred by the revised provision. Section 6. The proposed new section is substantially derived from the UPOAA and Chapter 644. New subsection a. (3) replaces current section 46:2B-8.9, which required that the power of attorney be in writing and duly signed and acknowledged as a deed. The new provision requires acknowledgement and proof of the principal's signature before two witnesses, neither of which is the agent, as well as a notary public or other officer in accordance with N.J.S. 46:14-6.1. A signature in compliance with this provision is presumed to be genuine (as is the case in the UPOAA, Section 104). A provision has been added to clarify that powers of attorney that grant the authority to "conduct real estate transactions" must be recorded prior to or simultaneously with the document executed by the agent in connection with the real estate transaction. The standards for validity under this section and recordability under N.J.S. 46:15-1.1, are not the same, and so although a power of attorney which meets the requirements of N.J.S. 46:15-1.1 is recordable, recording does not in and of itself mean the power of attorney is otherwise valid within the meaning of the section. Section 7. The current act does not provide or suggest a form of power of attorney. This section sets forth guidelines for the contents of a power of attorney. Subsection a. establishes those issues that should be addressed in a power of attorney in some manner although no form of power of attorney is mandated. Subsection b. sets forth illustrative guidelines. Both sets of guidelines are derived substantially from current practice, portions of the forms provided in Chapter 644 and the UPOAA that are deemed workable. Clarification is added regarding the requirement of preparing in recordable form those powers of attorney that grant the authority to conduct real estate transactions. Powers of attorney that grant an agent the authority to conduct health care billing, recordkeeping and payment also may authorize the agent to act as the personal representative of the principal for purposes of HIPAA. Section 8. The source statute is incorporated into this new section. Subsections b. and c. are derived, in part, from Section 114 of the UPOAA suggestions. Section 9. The source statute is incorporated into this new section with some modification in language based on the UPOAA. Subsection c. of the source statute has been moved to new provision 46:2B-20.17c. Section 10. This section is derived substantially from its source sections with some modifications in language. Subsection d. is new and derived, from among other sources, from Chapter 644. Subsection b. of this section deviates from its source provision by the deletion of the word "actual" before the word "notice. Subsection f. is derived from source section 46:2B-8.11 but adds the option of electronic transmission of an original power, as provided in the UPOAA (Section 106 d.). Subsection f. also provides a third method of certifying true copies of original powers of attorney and requires prompt return of the original power to the presenter. Section 11. This section is derived substantially from its source and merges the banking provisions with the current act, with some modifications in language. Section 12. This new section is derived from a form provided by a title group company. Section 13. This section provides for a summary method to compel third party acceptance of a power of attorney, the form and execution of which complies with the statute. The proposed new section is derived from Chapter 644 (section 5-1510). Section 14. The proposed new section is substantially derived from a combination of Chapter 644 and the UPOAA. Unlike the current statute and the UPOAA, but in keeping with New York's statute, this proposed revised section presumes that the principal intends the co-agents to act jointly unless otherwise provided. Subsection d. is adopted from the UPOAA. Section 15. This section is derived substantially from its source with some modifications in language. Section 16. This section is derived substantially from source section 46:2B-8.5 with some modifications in language. Reference to "actual" before the word "knowledge" has been deleted. Notice, as defined in this act, or constructive knowledge, is now sufficient. Section 17. Section 17 incorporates elements of the source statutes and section 3B:3-13 pertaining to the revocation of wills, and adopts some language from a combination of Chapter 644 and the UPOAA. Subsection e. refers to new section 46:2B-20.16 and reliance upon the concept (as adopted from source section 46:2B-8.5) that an agent's actions may bind a principal or principal's successors in interest, despite the revocation or termination of the power of attorney, if the agent acts in good faith and without knowledge of the principal's death or incapacity. Section 18. The proposed new section is substantially derived from Chapter 644 (section 5-1507) and the suggestions that the relationship of agent and principal be expressly stated when the agent signs on the principal's behalf. Section 19. This section is substantially derived from the source statute with the modification that the direction regarding compensation be provided, if at all, in the power of attorney itself and not in a separate written document. Possible reimbursement for reasonable expenses incurred, permitted in the UPOAA (section 112), is also included here. Section 20. This new section is derived substantially from its source with some modifications. Section 21. The current statute does not address powers of attorney executed in other jurisdictions. Proposed new subsection a. is substantially derived from Chapter 644. Proposed new subsection b. is substantially derived from the UPOAA. Section 22. This section is substantially derived from the source statute but also adds elements from Chapter 644 and the UPOAA. This section permits the authority to make gifts and other gratuitous transfers by express and specific provision in the power of attorney itself and sets out guidelines for doing so. This section also permits certain other acts only by express and specific provision in the power of attorney. Section 23. This section is derived substantially from its source with some modifications to expand its application beyond banking institutions. Section 24. This section is substantially derived from the UPOAA with some modifications. Section 25. This section is new and is self-explanatory. It is derived from the UPOAA. Section 26. This section is derived substantially from its source. Section 27. The proposed new section is substantially derived from the source provision with some modifications to language and to expand the section's application to financial institutions that may not be banking institutions. Sections 28 and 29 are substantially derived from Chapter 644, but follow the format established by current section 46:2B-11 pertaining to banking powers. Sections 30 through 39 are substantially derived from Chapter 644 and the UPOAA, but follow the format established by current section 46:2B-11 pertaining to banking powers. The bill repeals section 1 through 14, inclusive, of P.L. 2000, c.109 (C. 46:2B-8.1 through 46:2B-8.14) and section 1 of P.L. 2003, c. 138 (C. 46:2B-8.13a) and P.L. 1991, c.95 (C. 46:2B-10 through 46:2B-19).