When Kathryn Avery’s 93-year-old Dad moved out of a retirement home and into the home she shares with her husband, she was shocked to learn of the strict accounting rules that come along with setting up a joint checking account so that she could pay her father's expenses.

“I am required to account for every single dime and to justify every expense,” Avery told Financial Advisor magazine. “It’s tricky.”

That’s because Colorado is among the states that have enacted the Uniform Power of Attorney Act (UPOAA).

“It’s important to be aware of what your role and responsibility is when caring for an aging parent financially, because if you fail the state could potentially become an agent, fiduciary or guardian under your mom or dad’s power of attorney,” said Avery, who is a retirement readiness expert.

Although the Uniform Act was drafted and approved by the National Conference of Commissioners on Uniform State Laws in 2006, only 25 of the 51 states have enacted it to date.

“It has quite a lot of specificity, which creates consequences when a family member named power of attorney of an elder falls short,” says Michael Hackard, an estate and trust litigation attorney and author of The Wolf at the Door: Undue Influence and Elder Financial Abuse.

A uniform law is not a requirement but rather it’s model legislation that a state’s legislature can choose to adopt or not.

“Uniform laws move slowly,” said Benjamin Orzeske, chief counsel with the Uniform Law Commission in Chicago.

 “When a particular state legislature is ready to review their law, they'll often consider our act as a starting place.”

Texas, North Carolina, Wyoming and New Hampshire adopted it in 2017 while Georgia, Mississippi and the District of Columbia merely introduced it this year. “The city council of D.C. could pass it by the end of the year since they are still in session but the state legislatures of Georgia and Mississippi are not back in session again until 2018 at which time they could review it again,” Orzeske told Financial Advisor Magazine.

Michigan is another state that has not yet enacted the UPOAA.

“Brokerage firms like Schwab and Fidelity have historically given us a hard time about powers of attorney, so your best bet is to update the client’s current powers of attorney to reflect the UPOAA template whether you reside in a state that has adopted it or not,” says Leon LaBrecque, a financial advisor and attorney in Troy, Mich. 

The UPOAA sets minimum standards and identifies best practices for agents under powers of attorney. For example, an attorney-in-fact is called an “agent.”

“The Uniform Act requires the person appointed power of attorney to keep records and to provide an accounting upon request of those records to other family members who are involved with the elderly parent,” LaBrecque says. “The whole function of the Uniform Power of Attorney Act is to make sure the agent is accounting to the heirs.”

If the agent does not comply, family members and interested parties can petition their local court to secure copies of the senior’s accounting.

“If a financial advisor’s client has been named a power of attorney or plans to name a power of attorney, it would behoove the advisor to look at the authorities granted under the Uniform Act even if they live in a state that has not yet adopted it,” said the California-based Hackard, who advises financial planners.

In California, failing to maintain records is presumed to be a breach of trust and the burden is on the agent or attorney-in-fact to rebut that presumption.

“It can create real problems, even though California has not yet adopted the Uniform Act,” Hackard says.

States that have adoped the UPOAA have varying requirements but overall the model legislation sets important limits to the powers that an agent is granted.

For example, authorities that are not granted include the power to revoke or terminate an inter vivos trust and the power to change rights of survivorship.

“These are dangerous actions that can put an elder family member’s assets at risk,” Orzeske said.