HB 254-POWERS OF ATTORNEY  3:40:41 PM CHAIR OLSON announced that the next order of business would be HOUSE BILL NO. 254, "An Act relating to powers of attorney; relating to the uniform probate code; and providing for an effective date." REPRESENTATIVE REINBOLD moved to adopt the proposed committee substitute (CS) for HB 254 labeled 28-LS1057\U, Bannister, 3/6/14, [Version U] as the working document. CHAIR OLSON objected for the purpose of discussion. 3:41:14 PM GINGER BLAIDELL, Staff, Representative Shelley Hughes, Alaska State Legislature, explained the changes in Version U. She stated that the bill is lengthy and technical. The sponsor decided to file the bill just prior to the filing deadline and to make technical corrections to the bill later, which were incorporated into Version U. The power of attorney bill does primarily four things, she explained. First, page 2 outlines the power of attorney structure so the principal, who has the assets, is more likely to consider each type of financial power that is being awarded to the agent, who will be acting on their behalf. Additionally, referring to page 27, language was added to improve the ability for an agent to be removed of his/her powers in the event dishonesty or a breach of the agreement occurs. Second, a new section on page 28 specifies the agent's duties and it specifically identifies the duties of a person who obtains the power of attorney. Third, page 32, proposed Section 24, outlines the criteria for acceptance of power of attorney. Fourth, the language on page 34 was added that outlines the steps taken when a power of attorney is terminated or if the agent resigns, which previously was not clearly defined. 3:43:20 PM MS. BLAISDELL commented that language is updated throughout the bill so disability was replaced with incapacity. For example, there may be a number of instances in which a person may not be capable of making financial decisions due to the person being out of the country, missing, or temporarily injured. Thus, incapacity was a more appropriate term, which is defined on page 36 in paragraph (3). 3:44:19 PM MS. BLAISDELL provided a section-by-section analysis of HB 254, Version U. Section 1 would replace the current definition of an agent. She related that previous terms included "attorney-in- fact" and other terms that applied to the agent; however, this bill defines "agent" and replaces the terms with "agent." Section 2, a technical change, corrects the definition of "state" to include the U.S. Virgin Islands. Section 3 adds new definitions for "durable," "electronic," "power of attorney," "principal," "record," and "sign" as these terms relate to this act. She added that "sign" means, "with present intent to authenticate or adopt a record...." She pointed out that some individuals suffering from arthritis can barely sign their name once and this is intended to be less burdensome. 3:45:53 PM REPRESENTATIVE JOSEPHSON referred to the new definition for "durable" and asked whether it will it apply to living wills. MS. BLAISDELL said the definitions only apply to this act. REPRESENTATIVE REINBOLD remarked that she particularly liked the changes on page 3 and 4 since the transactions designating the power of attorney are broken into categories. 3:46:58 PM REPRESENTATIVE CHENAULT recalled the last power of attorney he was involved in and asked why a power of attorney is not acceptable in small claims case. REPRESENTATIVE JOSEPHSON answered that he was unsure, but the court has separate civil rules for small claims, which fall under district court rules. MS. BLAISDELL related that the definition of "sign" in Section 3, allows the person to adopt a tangible symbol or electronic sound. Thus, a person could fill out the forms, she said. 3:48:28 PM MS. BLAISDELL stated that Section 4 amends the statutory form required to assign a power of attorney, from giving the person single powers to opt out of each choice, with the intent of allowing the incapacitated person the opportunity to make better choices by helping inform the party what functions are being signed over. She emphasized that this represents the most significant change, which was recommended by the long-term care ombudsman and some senior centers, so that one signature doesn't encompass and transfer power over every legal transaction. REPRESENTATIVE REINBOLD remarked that she is very excited. She predicted that the changes this bill makes will be very helpful. 3:49:42 PM MS. BLAISDELL referred to Section 5, which amends the statutes that remove the powers to revoke, create, or modify a trust as a general authority. Throughout this bill, language "revoke, create, or amend a trust" is removed, she said. MS. BLAISDELL said three areas must be specifically initialed or the agent or agents will not have the power of authority since these areas can greatly impact the incapacitated person: first, for the authority being granted to create, amend, revoke, or terminate an inter vivos trust; second, for the authority to make a gift, subject to the limitations of AS 13.26.244 (h) and any special instructions in this power of attorney; and third, to create or change a beneficiary designation. Again, these three areas may be overarching of some of the other areas and must be specifically granted to the agent or agents, she said. 3:50:43 PM REPRESENTATIVE REINBOLD referred to page 4, line 20 and asked whether this would be a living trust. MS. BLAISDELL answered yes, that an inter vivos trust is used in estate planning and is also known as a living trust. 3:51:18 PM MS. BLAISDELL related that Sections 6-7 removes "revoke, create or modify a trust" since it must be specified. She related that Section 8 allows the agent to credit and debit cards. She clarified that the last time the power of attorney statutes were considered was in 1988 and not everyone had electronic transactions; thus, this will move power of attorney actions into the 21st Century. MS. BLAISDELL stated that Section 9 amends existing statute to conduct additional business related actions to further protect the interests of the principal; Section 10 amends existing statute to exercise investment powers available, which had not previously been included, and Section 11, on page 16, would repeal powers for the agent to receive general authority with respect to gift transactions. MS. BLAISDELL said that Section 12 would amend statutes to further define insurance transactions and allow the power of attorney to make decisions on insurance and issuance payments. Page 22 relates to provisions for personal representative authorizations to make child support payments and assist the principal who normally provided support for someone to continue to provide it. 3:54:03 PM REPRESENTATIVE CHENAULT asked whether an agent would exercise the authority to allow a person to live in customary support. He asked for clarification on how that would affect the power of attorney and whether it would take away or expand the authority. He wondered if the agent would take the power away and "control the purse strings." MS. BLAISDELL suggested there were two ways to think about it. First, the principal could select to have the agent take specific action, such as to only balance the principal's checkbook. The existing law allows the power of attorney to maintain customary standard of living for the spouse, children, and other dependents. She explained that [paragraph (1)] added a child "later born" and she was unsure if it would give more or less authority. She commented that it could be circumstantial to the person making the choices. 3:56:41 PM MS. BLAISDELL referred to page 24, paragraph (15), which notes that the agent may be privileged to Health Insurance Portability and Accountability Act (HIPPA) protected information in instances in which the agent has been asked to take care of some of the health care on behalf of the principal. She turned to page 25, Section 15, which gives the power of attorney or civil or military service benefits, which has arisen due to the U.S. involvement in which some military with overseas action did not return home in same capacity. She referred to page 26, proposed Section 16, which she said relates to retirement plans. MS. BLAISDELL stated that Section 17 relates to the state recognizing power of attorney executed in another state so long as it was completed under the rules of the other jurisdiction. She explained that Section 18, which was supported by the long- term ombudsman, addresses relieving a power of attorney if the person committed dishonesty with an improper motive or with reckless indifference. She explained that previously it wasn't possible to remove a person once they had the power of attorney. 3:59:24 PM CHAIR OLSON asked for clarification on the numbering sequence. MS. BLAISDELL agreed that she may have started with the original bill so the sections didn't match Version U. She reported that Section 19 includes all of the agent's duties, including acting in good faith, and within the scope of duty granted to an agent. She reiterated that it describes the duties of an agent, as well as provisions if a breach of agreement occurs. MS. BLAISDELL related that Section 20 replaces "principal" "incapacity" and "agent" throughout the bill. She characterized the changes as being technical changes. 4:01:07 PM MS. BLAISDELL pointed out that Section 22 identifies how incapacity is determined, including when a principal suffers an impairment in his/her ability to receive and evaluate information or make or communicate decisions, or because the principal is missing, detained or incarcerated. She stated that Section 24 explains the acceptance of power of attorney so agents can better understand their responsibilities on behalf of the principal. Section 25 outlines the termination of power of attorney and Sections 26 and 27 are technical changes. Section 28 adds additional definitions, including benefits from government programs or civil or military service, good faith, incapacity, and retirement plans. She summarized the four primary changes in the bill. It would also revise the form to make it more responsive for principals so they can better understand the authority they are giving the agent. It improves the language to remove a power of attorney if the person is not acting appropriately. It identifies the duties of a power of attorney. Finally, it changes some definitions. 4:02:48 PM REPRESENTATIVE JOSEPHSON acknowledged the complexity of family law, noting the frequent use of conservatorship and trustees. He asked how this interacts with those terms, in particular, conservatorship, in which someone has similar powers, but is deemed conservator. MS. BLAISDELL answered that she was unsure. She stated that all definitions were specific to a power of attorney. 4:03:39 PM REPRESENTATIVE JOSEPHSON asked whether a model law was used to craft the bill or if the sponsor proposed the concept. MS. BLAISDELL answered that the AARP first suggested the changes. 4:04:05 PM REPRESENTATIVE SHELLEY HUGHES, Alaska State Legislature, stated that she was first approached by people at the senior center. She discussed this with AARP and considered uniform law changes and which ones made sense in Alaska. She said that the sponsor has worked with the Association of Mature Americans, the AARP's counterpart, and the organization has been supportive. Further she worked with the long-term care ombudsman and the governor's office and said it is a joint effort. She related that the last substantial work on this section of law was done in 1988. About one in seven Alaskans is age 60 or older. She also pointed out the importance of assisting vulnerable Alaskans and helping children assist their parents. These changes are compatible with interstate laws, which she said was a reason to consider the effects of the uniform law, especially since it is likely Alaskans will be separated from their parents by a state line. 4:07:10 PM REPRESENTATIVE REINBOLD referred to page 3 line 31, subparagraph (G), estate transactions. She related a scenario in which a principal requests a will, but subsequently gives someone the ability to handle estate transactions. She also referred to page 4, line 26-28, that agents can be different agents. She asked who would have the authority. 4:08:31 PM MS. BLAISDELL referred to subparagraph (G) and pointed out that page 21, Section 13, identifies the structure for power of attorney for estate transactions. She recalled the legislative attorney's explanation that a will is used when a person dies, and a power of attorney is used when the person is living. The provisions in a will might flip completely, versus what the principal outlines in the power of attorney for the day to day actions. REPRESENTATIVE JOSEPHSON said he believed she is correct. CHAIR OLSON said he likes the bill and he hoped the sectional will better match the bill at the next committee. 4:10:22 PM KEN HELANDER, Director for Advocacy, AARP-Alaska, said that he and his predecessor, Pat Luby, have worked on this issue with the sponsor and believes this bill protects the interests of older Alaskans. He related that a power of attorney is a legal document used by an individual, the principal, to name someone else, the agent, to make financial decisions and to act on the principal's behalf. He clarified that this is not a health care power of attorney and it does not offer health care decisions, but it does authorize planning for the possibility of future incapacity and avoid the court appointment of a guardian or conservator. He pointed out that a power of attorney is private, without any oversight by a court. MR. HELANDER said that state laws are often unclear about the duty owed by the agent to the principal. This combination of broad authority, lack of oversight, and unclear duties makes it possible for agents to misuse their authority. He said power of attorney abuse, often called a "license to steal," is a form of financial exploitation. To help curb this type of elder financial exploitation, AARP supports state efforts to expand the power of attorney laws by adopting reforms at least as stringent as those outlined in the uniform power of attorney act. The act contains provisions that aim to promote autonomy and to prevent power of attorney abuse. The most important of these provisions pertain to the "hot powers." Under the current statute, the principal gives blanket consent to these powers with a signature unless they intentionally cross them off a list. This bill, following the uniform power of attorney format, requires the principal to opt in by initialing each specific power. This action requires careful consideration as to the duties being delegated to the agent and lessens the opportunity for exploitation. Additionally, this bill more clearly defines the responsibilities of the agent to protect the interests of the principal and it sets out guidelines for third party acceptance. He concluded that the AARP supports HB 254, Version U, and believes it will strengthen protection of vulnerable adults in Alaska. He said that 13 states have enacted the Uniform Power of Attorney Act, with Hawaii and Iowa awaiting their respective governor's signatures to become the 14th and 15th states. Connecticut and Kansas are also considering these changes. He encouraged committee members to help include Alaska on this growing list. 4:14:11 PM CHAIR OLSON, after first determining no one else wished to testify, closed public testimony on HB 254. CHAIR OLSON removed his objection. REPRESENTATIVE JOSEPHSON said he thinks this is a good bill. He referred to page 3, which requires a principal to initial certain authorizations that might be a problem if the person is truly incapacitated and can't initial. He suggested that these provisions might be dealt with in another committee and aren't a reason to stop the bill. 4:15:13 PM REPRESENTATIVE REINBOLD moved to report the proposed committee substitute (CS) for HB 254 labeled 28-LS1057\U, Bannister, 3/6/14, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, the CSHB 254(L&C) was reported from the House Labor and Commerce Standing Committee.