Rep. Leo Berman, R-Tyler, filed HB 330 on December 6, 2000. This bill clearly is intended to make it easier for family members of elderly or infirm persons to take action when their loved one executes a durable power of attorney under what they consider to be dubious circumstances. Unfortunately, it would apply to everyone, even perfectly healthy adults who may not want anyone (and most particularly all of their children, aunts, uncles, etc.) to know that they are doing a little estate planning. It also gives persons who probably have no business interfering in someone else's affairs the right to haul their loved one into court to challenge the power of attorney without having the factual basis required to institute a guardianship proceeding.

The bill would enact new Sections 482A and 488A of the Probate Code. Under Section 482A, anyone executing a durable power of attorney would be required to give notice of the execution by certified mail, return receipt requested, to each person who is related to the principal within the second degree of consanguinity or affinity and whose address is known or ascertainable. The notice must name the agent named in the power, and the power doesn't take effect unless and until the notice is given.

If I read Tex. Gov. Code Ch. 573 correctly (concerning nepotism) and if that standard of "consanguinity and affinity" applies, that means anyone executing a durable power of attorney would have to give certified mail notice to:

• his spouse;
• his parents;
• his grandparents;
• his children;
• his grandchildren (what about minors? they aren't excluded);
• his brothers and sisters;
• his nieces and nephews;
• his aunts and uncles;
• his first cousins;
• his SPOUSE'S parents;
• etc., etc., etc.

The power isn't effective if these notices aren't given. That may mean that, as a practical matter, the agent would have to prove to the satisfaction of a third party (such as a bank or transfer agent) that all such notices are given. Even if the agent goes to the third party with a stack of green cards, how can he/she prove to the satisfaction of the third party that everyone got the required notice? There is no quick and easy registry of everyone's kin.

Section 488A gives any person who receives a notice under Section 482A standing to file an "application for revocation" of the power in the court having probate jurisdiction where the principal resides. (Here's a new venue concept, different from Probate Code Sections 6 and 610.) The court, "after notice and hearing" (whom must be notified?), SHALL "revoke" the power if it determines by a preponderance of the evidence that "the principal lacked sufficient mental capacity to execute the durable power of attorney as a result of mental illness or a brain injury or disorder, including dementia, Alzheimer's disease, or a related disorder, regardless of whether the illness, injury, or disorder had been diagnosed at the time the document was executed." (Here's a new capacity concept, different from the guardianship standard [Section 601 (13)] and the will or contract standard [case law]). Also, after notice and hearing, the court MAY revoke the power if it determines by a preponderance of the evidence that (1) the execution of the power was a result of fraud, duress, coercion or undue influence; (2) the agent has committed a breach of fiduciary duty; or (3) the agent has committed "any other act involving the management or control of the principal's property under the durable power of attorney that would constitute a ground for revocation of the power of attorney." Presumably these last two grounds for "revocation" arise later -- after the agent has had a chance to botch things up -- so there appears to be no time limit on the right of family members to bring this action. The "any other act" which is "a ground for revocation" standard presumably means that the judge can revoke a power for any reason it wants.

The statute provides that the judge shall or may "revoke" the power, rather than "remove" the agent. If an agent is acting badly and the power names an alternate agent, isn't a better remedy removal of the bad agent so the alternate can take over?

We've all been contacted by family members (who, a cynic might point out, are almost always potential heirs at law or will beneficiaries of the principal) who are concerned about the actions of an agent under a power of attorney for an elderly or sick relative. Unless that family member is named as a co-agent or gets the family member to revoke the power or execute a new power, there is very little he or she can do to unseat the agent, unless he or she is willing to institute a guardianship proceeding and has the factual basis for such action.

On the other hand, we've also all been working with elderly or infirm clients who want privacy in their affairs and who want to name someone to act as their agent without a lot of interference from others. Since there is a presumption of capacity in this state, shouldn't adults be able to arrange their affairs any way they wish without telling everyone they are related to what they are doing? Maybe the high guardianship standard of protection for these people is not such a bad thing.

Also, we've all represented clients in the prime of life with no possible incapacity who wish to execute powers of attorney to cover the contingency of a later incapacity. It is ridiculous to expect those people to send certified mail notices to each required person. At best, this will discourage bona fide disability planning. At worst, it will result in a lot of invalid powers of attorney that could have been useful in handling the affairs of persons who unexpectedly become incapacitated.

Even though the proposed statute requires the principal to give the notice when the power is executed, it may be possible for the agent to give the notice after the incapacity occurs but before he or she wishes to use the power. (The bill could be amended to more clearly permit this.) If that is the case, I still would have a problem with the bill (lots of people with no business knowing things would get notice, there would be problems proving to the satisfaction of the third party that the notice was given, etc.), but that would work much better as a practical matter -- if the agent wanted to use the power, he or she would have to notify the family members; if there was no need to use the power, then no notice would be required.

Probate judges may not want this business thrown into their laps. Texas law provides for guardianships as a means for court-supervised administration of an incapacitated person's affairs. Why would a probate judge want to get in the middle of deciding whether or not to "revoke" a power of attorney when appointment of a guardian automatically terminates the power (Section 485 -- note that this section may be amended in 2001 to reflect that appointment of a temporary guardian does not permanently terminate the power of attorney).

All in all, HB 330 is an ill-advised overreaction that hopefully will not become law. [12/09/00].