Swiss Army knives are known for having a wide variety of tools and accessories included in a compact package. But they are no substitute for a basin wrench when attempting to remove a kitchen sink from a cabinet fixture. As is the case for a competent trade worker, a planner should be aware not only of the uses but also of the limitations of the instruments in their planning toolbox. This article addresses some, but not all, of the limitations on a Texas agent’s authority.
Texas has adopted its version of the Uniform Durable Power of Attorney Act (the Act), now contained in Texas Estates Code, Title 2, Subtitle P. TEX. EST. CODE ANN. § 751.001. Within Subtitle P, Chapter 751 contains general provisions regarding durable powers of attorney, and Chapter 752 addresses particular aspects of these instruments and contains a statutory form. TEX. EST. CODE ANN. §§ 752.001–.115 (providing a form of a Statutory Durable Power of Attorney, or “SDPOA” in Section 752.051). That form is not the exclusive means of establishing an SDPOA under the Act. TEX. EST. CODE ANN. § 752.003. A document that is “substantially” in the statutory form has the meaning and effect of an SDPOA. TEX. EST. CODE ANN. §§ 752.001(b), 752.004(1). That non-exclusivity also results in the validity of an instrument that “includes specific limitations on, or additions to” the powers of an agent under an instrument otherwise effective as an SDPOA. TEX. EST. CODE ANN. § 752.002(2).
An agent’s authority under an SDPOA is broad. Like that Swiss Army knife, the form contained in the Texas Estates Code includes multiple categorical grants of authority, with brief descriptive titles, lettered (A) through (N), such as real property transactions, tangible personal property transactions, and tax matters. Tex. Est. Code Ann. §§ 752.051 (providing the statutory form); 752.101-.115 (delineating the scope of the defined-phrase categories). In addition, Section 752.052 authorizes modifying the statutory form to grant specific authority described by Section 751.031(b), which relates to particular aspects of estate or lifetime planning authority and also authorizes an agent to delegate authority under the SDPOA.
Notwithstanding its substantial breadth, an SDPOA does not completely preempt the field regarding agency authority. For instance, the Act expressly does not “apply to” a power of attorney coupled with an interest, a medical power of attorney, a proxy regarding voting or management rights with respect to an entity, or a power of attorney form prescribed by a governmental entity for a governmental purpose. TEX. EST. CODE ANN. § 751.0015. In addition, the Act does not supersede, to the extent of any inconsistency, other laws relating to financial institutions or other entities, nor does it validate a void (but not merely voidable) conveyance by an agent of an interest in real property. TEX. EST. CODE ANN. § 751.007(1), (2). Finally, the form itself only extends the principal’s grant of authority to the agent “to act for me [the principal] in any lawful way with respect to all of the following powers that I have initialed below.” TEX. EST. CODE ANN. § 752.051 (emphasis added) (including choice (O), which includes all of the powers listed in categories (A) through (N) and which, if chosen, precludes the principal from having to initial each other’s choice). The form thus requires the agent to act in a lawful way, but only with respect to the powers granted by the principal in the document. Textually, the form does not constitute a type of “universal” power of attorney.
In addition to SDPOAs, Texas also recognizes common law powers of attorney (a CLPOA). CLPOAs may be classified in various ways, such as by the breadth of the scope of the agent’s authority (general, limited, or special) and the duration of that authority (such as those with no specified duration; those that terminate by operation of law; those in effect for a specified time period; those that terminate upon the occurrence or cessation of a specified event or condition; or those in which the agent’s appointment is irrevocable due to being coupled with an interest in favor of the agent). Classification, thus, is a function of the overall creation of authority and the particular terms of the instrument, and that determination in turn may affect a court’s disposition of challenges arising from or construction of the scope, effects, or duration of the CLPOA.
Consistent with the statutory “carve-outs” related to an SDPOA, some creations of agency authority are addressed in other legislative contexts, such as Chapter 166 of the Texas Health & Safety Code. TEX. HEALTH & SAFETY CODE ANN. §§ 166.001-.209 (dealing with advance directives such as medical powers of attorney, out-of-hospital and in-patient do not resuscitate declarations). Specific statutes may preclude the use of powers of attorney in particular circumstances, such as the ban on agents exercising their authority to create a Transfer on Death Deed. TEX. EST. CODE ANN. § 114.054(b).
Various agencies have adopted their own forms to accomplish specific functions related to their missions. For instance, the Texas Department of Motor Vehicles has issued Form VTR-271, “Limited Power of Attorney for Eligible Motor Vehicle Transactions.” As another example, the Texas Comptroller has a specialized form for agency interactions with agents for taxpayers, Form 01-137, “Limited Power of Attorney.”
As a matter of public policy, absent the provisions of a controlling legislative provision, some acts or decisions of the principal are not subject to lawfully being exercised by the agent in such a way as to bind the principal, except perhaps by subsequent approval or ratification by the principal if competent, or following judicial authorization or ratification. Although caselaw on these topics is sparse, these limitations might include the following:
- Marriage, annulment, or divorce of the principal to or from another person.
- Adoption of or termination of parental rights by the principal with respect to another person, whether that other person is a minor or an adult.
- Serving on a trial jury or grand jury in the place of the principal.
- Enlistment or enrollment in, renewal of, or termination of service with any law enforcement agency or military department.
- Employment decisions, such as the principal becoming an employee or terminating the principal’s employment.
- Abandonment of status as a citizen of the United States of America or becoming a citizen of any other nation or sovereignty.
A planner should carefully counsel clients about the benefits, uses, and potential dangers of powers of attorney, and should not advise the client that a power of attorney authorizes the agent to do anything that the client could do themselves directly. By discussing pertinent limitations with the client on the agent’s authority, then-anticipated circumstances or possible future scenarios can be explored, to identify appropriate solutions, to address the client’s needs, or to, at least, lay the groundwork for future analysis and action. Notwithstanding advertisements to the contrary, a single tool cannot “do it all.” Not even a Swiss Army knife.
Acknowledgment: The author appreciates the valuable research assistance of James W. Cardell, a 3L student at the University of Houston Law Center.