Minnesota’s legislators have been busy working up new and exciting changes to Minnesota’s estate planning landscape. Perhaps less controversial and less exciting, (and, some would argue, more concrete) than the new Minnesota Gift Tax, this article will summarize some of the changes made to the Minnesota Statutory Short Form Power of Attorney document. With its broad and sweeping powers, a Power of Attorney document can be an extremely useful tool, but with power can come misuse. The legislative changes to Minnesota Statutes Chapter 523 have their origin in the Vulnerable Adult Justice Project, a group led by Iris Freeman, lobbyist and director of the Center for Elder Justice & Policy at the William Mitchell College of Law, and the changes are largely intended to protect vulnerable adults from potential abuse.
The changes made to Minnesota’s Power of Attorney form are effective January 1, 2014. In addition to the changes to the form, a new provision has been added to Chapter 523 regarding Judicial Relief. This provision is effective August 1, 2013 and applies to all Power of Attorney documents, before, on, or after this date. This article will focus on the changes made to the form and not the new Judicial Relief provision.
A brief summary of important changes . . .
Important Notice to Principal and Attorneys–in-Fact
The new Power of Attorney form includes a detailed “Important Notice” following the signature page of the document. This notice has two sections addressing the Principal and his or her Attorneys-in-fact (AIF). The Principal and the AIF must acknowledge having read and understood the notice, which includes details regarding the duties, responsibilities, and liabilities of the AIF, and details regarding termination, accountings, etc. to the Principal.
Gifts Made by and for the Attorney-in-Fact
Effective January 1, 2014, gifts made by an AIF to him or herself or to anyone he or she has a legal obligation to support (if this power is given by the principal in the document) will be limited by the current federal annual gift tax exclusion effective during the year when the gift was made ($14,000 right now). Before January 1, 2014, Minnesota Statutes set this limit at $10,000.
Also, the section of the form granting the power to the AIF to make gifts to him or herself has been revised. The Principal must check that the AIF has the power to make gifts to him or herself and also write in the name of the AIF. This is useful, since perhaps a spouse as primary AIF could make transfers to himself, but the successor AIF, a brother-in-law maybe, should not being doing this.
Multiple Attorneys-in-Fact
The new form clarifies the option requiring multiple AIF’s to act jointly. When the option is selected, it applies only when multiple AIFs are appointed to act together.
Health Care Decisions
The new form clarifies (in the “Powers given to the Attorney-in-fact” section) that “all powers” does not include health care decisions, which would require a separate Health Care Directive form.
These are the practical, nuts and bolts changes to the Power of Attorney document. Now, professionals, go forth and update your documents! And financial services professionals, be on the look-out for valid Power of Attorney documents once January 1, 2014 rolls around.
