As of July 1, 2010, a new power of attorney statute for Virginia went into effect. The new statute, which applies prospectively to both existing powers of attorney and powers of attorney created years ago, makes some significant changes about which all of our clients should know.
First, there is a change in terminology. Under the prior Virginia Act, the terminology typically used was that of “Attorney-in-Fact.” In order to avoid the confusion created by this terminology, because it is sometimes difficult to distinguish between Attorney-in-Fact and lawyers, who are referred to as Attorneys-at-Law, the terminology adopted by the Act is that the individual who holds the Power of Attorney will now be referred to as an “Agent.”
In addition, there are significant changes with respect to how these documents will be interpreted. Most specifically, the old statutory rule that Powers of Attorney were to be construed strictly against the individual who held the power have been, in large part, swept aside. Now, under the new statute, a Power of Attorney which is executed and properly notarized, can and should be recognized by third party financial institutions, and failure to do so can create significant and substantial liability on the part of such institutions because the statute contains a mechanism that allows a properly executed and notarized power of attorney to be honored without further inquiry and shifts the burden of not doing so to the financial institutions refusing to comply.
The Virginia statutory changes are based on the Uniform Power of Attorney Act, but as is always the case, when each state enacts such a uniform act, there are changes made and in the case of the Virginia Act, life has gotten simpler for Virginia principles provided their Powers of Attorney are in appropriate form. The contents of a Power of Attorney and how the Act will operate are very much dependent upon the contents of the Power of Attorney. As always, proper design and drafting is crucial to achieve the best results. We at Wolcott Rivers Gates are knowledgeable in this area and can assist you with these documents.