1-1 By: Parker S.B. No. 176 1-2 (In the Senate - Filed January 26, 1993; January 27, 1993, 1-3 read first time and referred to Committee on Jurisprudence; 1-4 February 9, 1993, reported adversely, with favorable Committee 1-5 Substitute by the following vote: Yeas 6, Nays 0; 1-6 February 9, 1993, sent to printer.) 1-7 COMMITTEE VOTE 1-8 Yea Nay PNV Absent 1-9 Henderson x 1-10 Harris of Tarrant x 1-11 Brown x 1-12 Harris of Dallas x 1-13 Luna x 1-14 Parker x 1-15 West x 1-16 COMMITTEE SUBSTITUTE FOR S.B. No. 176 By: Parker 1-17 A BILL TO BE ENTITLED 1-18 AN ACT 1-19 relating to the adoption of the Durable Power of Attorney Act. 1-20 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-21 SECTION 1. The Texas Probate Code is amended by adding 1-22 Chapter XII to read as follows: 1-23 CHAPTER XII. DURABLE POWER OF ATTORNEY ACT 1-24 Sec. 481. SHORT TITLE. This chapter may be cited as the 1-25 Durable Power of Attorney Act. 1-26 Sec. 482. DEFINITION. A "durable power of attorney" means a 1-27 written instrument that: 1-28 (1) designates another person as attorney in fact or 1-29 agent; 1-30 (2) is signed by an adult principal; 1-31 (3) contains the words "This power of attorney is not 1-32 affected by subsequent disability or incapacity of the principal," 1-33 or "This power of attorney becomes effective on the disability or 1-34 incapacity of the principal," or similar words showing the 1-35 principal's intent that the authority conferred on the attorney in 1-36 fact or agent shall be exercised notwithstanding the principal's 1-37 subsequent disability or incapacity; and 1-38 (4) is acknowledged by the principal before an officer 1-39 authorized to take acknowledgments to deeds of conveyance and to 1-40 administer oaths under the laws of this state or any other state. 1-41 Sec. 483. DURATION. A durable power of attorney does not 1-42 lapse because of the passage of time unless the instrument creating 1-43 the power of attorney specifically states a time limitation. 1-44 Sec. 484. EFFECT OF ACTS BY ATTORNEY IN FACT OR AGENT DURING 1-45 INCAPACITY OF PRINCIPAL. All acts done by an attorney in fact or 1-46 agent pursuant to a durable power of attorney during any period of 1-47 disability or incapacity of the principal have the same effect and 1-48 inure to the benefit of and bind the principal and the principal's 1-49 successors in interest as if the principal were not disabled or 1-50 incapacitated. 1-51 Sec. 485. RELATION OF ATTORNEY IN FACT OR AGENT TO 1-52 COURT-APPOINTED GUARDIAN OF ESTATE. If, after execution of a 1-53 durable power of attorney, a court of the principal's domicile 1-54 appoints a guardian of the estate of the principal, the powers of 1-55 the attorney in fact or agent terminate on the qualification of the 1-56 guardian of the estate, and the attorney in fact or agent shall 1-57 deliver to the guardian of the estate all assets of the estate of 1-58 the ward in the attorney's or agent's possession and shall account 1-59 to the guardian of the estate as the attorney or agent would to the 1-60 principal had the principal terminated his powers. 1-61 Sec. 486. KNOWLEDGE OF DEATH, GUARDIAN OF ESTATE, OR 1-62 REVOCATION; GOOD-FAITH ACTS. The revocation by, the death of, or 1-63 the qualification of a guardian of the estate of a principal who 1-64 has executed a durable power of attorney does not revoke or 1-65 terminate the agency as to the attorney in fact, agent, or other 1-66 person who, without actual knowledge of the termination of the 1-67 power by revocation, by the principal's death, or by the 1-68 qualification of a guardian of the estate of the principal, acts in 2-1 good faith under or in reliance on the power. Any action so taken, 2-2 unless otherwise invalid or unenforceable, binds successors in 2-3 interest of the principal. 2-4 Sec. 487. AFFIDAVIT OF LACK OF KNOWLEDGE OR TERMINATION OF 2-5 POWER; RECORDING. (a) As to acts undertaken in good-faith 2-6 reliance on the durable power of attorney, an affidavit executed by 2-7 the attorney in fact or agent under a durable power of attorney 2-8 stating that the attorney in fact or agent did not have at the time 2-9 of exercise of the power actual knowledge of the termination of the 2-10 power by revocation, by the principal's death, or by the 2-11 qualification of a guardian of the estate of the principal is 2-12 conclusive proof as between the attorney in fact or agent and a 2-13 person other than the principal or the principal's personal 2-14 representative dealing with the attorney in fact or agent of the 2-15 nonrevocation or nontermination of the power at that time. 2-16 (b) As to acts undertaken in good-faith reliance on the 2-17 durable power of attorney, an affidavit executed by the attorney in 2-18 fact or agent under a durable power of attorney stating that the 2-19 principal is disabled or incapacitated, as defined by the power, is 2-20 conclusive proof as between the attorney in fact or agent and a 2-21 person other than the principal or the principal's personal 2-22 representative dealing with the attorney in fact or agent of the 2-23 disability or incapacity of the principal at that time. 2-24 (c) If the exercise of the power of attorney requires 2-25 execution and delivery of any instrument that is to be recorded, an 2-26 affidavit executed under Subsection (a) or (b) of this section, 2-27 when authenticated for record, may also be recorded. 2-28 (d) This section does not affect any provision in a durable 2-29 power of attorney for its termination by expiration of time or 2-30 occurrence of an event other than express revocation. 2-31 Sec. 488. REVOCATION OF DURABLE POWER OF ATTORNEY. Unless 2-32 otherwise provided by the durable power of attorney, a revocation 2-33 of a durable power of attorney is not effective as to a third party 2-34 relying on the power of attorney until the third party receives 2-35 actual notice of the revocation. 2-36 Sec. 489. RECORDING DURABLE POWER OF ATTORNEY FOR REAL 2-37 PROPERTY TRANSACTIONS. A durable power of attorney for a real 2-38 property transaction requiring the execution and delivery of an 2-39 instrument that is to be recorded, including a release, assignment, 2-40 satisfaction, mortgage, security agreement, deed of trust, 2-41 encumbrance, deed of conveyance, oil, gas, or other mineral lease, 2-42 memorandum of a lease, lien, or other claim or right to real 2-43 property, shall be recorded in the office of the county clerk of 2-44 the county in which the property is located. 2-45 Sec. 490. STATUTORY DURABLE POWER OF ATTORNEY. (a) The 2-46 following form is known as a "statutory durable power of attorney." 2-47 A person may use a statutory durable power of attorney to grant an 2-48 attorney in fact or agent powers with respect to a person's 2-49 property and financial matters. A power of attorney in 2-50 substantially the following form has the meaning and effect 2-51 prescribed by this chapter. The validity of a power of attorney as 2-52 meeting the requirements of a statutory durable power of attorney 2-53 is not affected by the fact that one or more of the categories of 2-54 optional powers listed in the form are struck or the form includes 2-55 specific limitations on or additions to the attorney in fact's or 2-56 agent's powers. 2-57 When a power in substantially the form set forth in this 2-58 chapter is used, third parties who rely in good faith on the acts 2-59 of the agent within the scope of the power may do so without fear 2-60 of liability to the principal. 2-61 The following form is not exclusive, and other forms of power 2-62 of attorney may be used. 2-63 STATUTORY DURABLE POWER OF ATTORNEY 2-64 NOTICE: THE POWERS GRANTED BY THIS DOCUMENT ARE BROAD AND 2-65 SWEEPING. THEY ARE EXPLAINED IN THE DURABLE POWER OF ATTORNEY ACT, 2-66 CHAPTER XII, TEXAS PROBATE CODE. IF YOU HAVE ANY QUESTIONS ABOUT 2-67 THESE POWERS, OBTAIN COMPETENT LEGAL ADVICE. THIS DOCUMENT DOES 2-68 NOT AUTHORIZE ANYONE TO MAKE MEDICAL AND OTHER HEALTH-CARE 2-69 DECISIONS FOR YOU. YOU MAY REVOKE THIS POWER OF ATTORNEY IF YOU 2-70 LATER WISH TO DO SO. 3-1 I, (insert your name and address), 3-2 appoint (insert the name and address of 3-3 the person appointed) as my agent (attorney-in-fact) to act for me 3-4 in any lawful way with respect to the following initialed subjects: 3-5 TO GRANT ALL OF THE FOLLOWING POWERS, INITIAL THE LINE IN 3-6 FRONT OF (N) AND IGNORE THE LINES IN FRONT OF THE OTHER POWERS. 3-7 TO GRANT ONE OR MORE, BUT FEWER THAN ALL, OF THE FOLLOWING 3-8 POWERS, INITIAL THE LINE IN FRONT OF EACH POWER YOU ARE GRANTING. 3-9 TO WITHHOLD A POWER, DO NOT INITIAL THE LINE IN FRONT OF IT. 3-10 YOU MAY, BUT NEED NOT, CROSS OUT EACH POWER WITHHELD. 3-11 INITIAL 3-12 (A) real property transactions; 3-13 (B) tangible personal property transactions; 3-14 (C) stock and bond transactions; 3-15 (D) commodity and option transactions; 3-16 (E) banking and other financial institution 3-17 transactions; 3-18 (F) business operating transactions; 3-19 (G) insurance and annuity transactions; 3-20 (H) estate, trust, and other beneficiary transactions; 3-21 (I) claims and litigation; 3-22 (J) personal and family maintenance; 3-23 (K) benefits from social security, Medicare, Medicaid, 3-24 or other governmental programs or civil or military 3-25 service; 3-26 (L) retirement plan transactions; 3-27 (M) tax matters; 3-28 (N) ALL OF THE POWERS LISTED IN (A) THROUGH (M). YOU 3-29 NEED NOT INITIAL ANY OTHER LINES IF YOU INITIAL LINE 3-30 (N). 3-31 SPECIAL INSTRUCTIONS: 3-32 ON THE FOLLOWING LINES YOU MAY GIVE SPECIAL INSTRUCTIONS 3-33 LIMITING OR EXTENDING THE POWERS GRANTED TO YOUR AGENT. 3-34 ___________________________________________________________________ 3-35 ___________________________________________________________________ 3-36 ___________________________________________________________________ 3-37 ___________________________________________________________________ 3-38 ___________________________________________________________________ 3-39 ___________________________________________________________________ 3-40 ___________________________________________________________________ 3-41 ___________________________________________________________________ 3-42 ___________________________________________________________________ 3-43 ___________________________________________________________________ 3-44 UNLESS YOU DIRECT OTHERWISE ABOVE, THIS POWER OF ATTORNEY IS 3-45 EFFECTIVE IMMEDIATELY AND WILL CONTINUE UNTIL IT IS REVOKED. 3-46 CHOOSE ONE OF THE FOLLOWING ALTERNATIVES BY CROSSING OUT THE 3-47 ALTERNATIVE NOT CHOSEN: 3-48 (A) This power of attorney is not affected by my 3-49 subsequent disability or incapacity. 3-50 (B) This power of attorney becomes effective upon my 3-51 disability or incapacity. 3-52 YOU SHOULD CHOOSE ALTERNATIVE (A) IF THIS POWER OF ATTORNEY 3-53 IS TO BECOME EFFECTIVE ON THE DATE IT IS EXECUTED. 3-54 IF NEITHER (A) NOR (B) IS CROSSED OUT, IT WILL BE ASSUMED 3-55 THAT YOU CHOSE ALTERNATIVE (A). 3-56 I agree that any third party who receives a copy of this 3-57 document may act under it. Revocation of the durable power of 3-58 attorney is not effective as to a third party until the third party 3-59 receives actual notice of the revocation. I agree to indemnify the 3-60 third party for any claims that arise against the third party 3-61 because of reliance on this power of attorney. 3-62 If any agent named by me dies, becomes legally disabled, 3-63 resigns, or refuses to act, I name the following (each to act alone 3-64 and successively, in the order named) as successor(s) to that 3-65 agent: . 3-66 Signed this ____________ day of ______________________, 19___ 3-67 __________________________________ 3-68 (your signature) 3-69 State of ____________________ 3-70 County of ___________________ 4-1 This document was acknowledged before me on 4-2 _______________________ (date) by _________________________________ 4-3 (name of principal) 4-4 _________________________________ 4-5 (signature of notarial officer) 4-6 (Seal, if any, of 4-7 notary) _________________________________ 4-8 (printed name) 4-9 My commission expires: _________ 4-10 THE ATTORNEY IN FACT OR AGENT, BY ACCEPTING OR ACTING UNDER 4-11 THE APPOINTMENT, ASSUMES THE FIDUCIARY AND OTHER LEGAL 4-12 RESPONSIBILITIES OF AN AGENT. 4-13 (b) A statutory durable power of attorney is legally 4-14 sufficient under this chapter if the wording of the form complies 4-15 substantially with Subsection (a) of this section, the form is 4-16 properly completed, and the signature of the principal is 4-17 acknowledged. 4-18 (c) If the line in front of (N) of the form under Subsection 4-19 (a) of this section is initialed, an initial on the line in front 4-20 of any other power does not limit the powers granted by line (N). 4-21 Sec. 491. CONSTRUCTION OF POWERS GENERALLY. The principal, 4-22 by executing a statutory durable power of attorney that confers 4-23 authority with respect to any class of transactions, empowers the 4-24 attorney in fact or agent for that class of transactions to: 4-25 (1) demand, receive, and obtain by litigation, action, 4-26 or otherwise any money or other thing of value to which the 4-27 principal is, may become, or may claim to be entitled; 4-28 (2) conserve, invest, disburse, or use any money or 4-29 other thing of value received on behalf of the principal for the 4-30 purposes intended; 4-31 (3) contract in any manner with any person, on terms 4-32 agreeable to the attorney in fact or agent, to accomplish a purpose 4-33 of a transaction and perform, rescind, reform, release, or modify 4-34 the contract or another contract made by or on behalf of the 4-35 principal; 4-36 (4) execute, acknowledge, seal, and deliver a deed, 4-37 revocation, mortgage, lease, notice, check, release, or other 4-38 instrument the agent considers desirable to accomplish a purpose of 4-39 a transaction; 4-40 (5) prosecute, defend, submit to arbitration, settle, 4-41 and propose or accept a compromise with respect to a claim existing 4-42 in favor of or against the principal or intervene in an action or 4-43 litigation relating to the claim; 4-44 (6) seek on the principal's behalf the assistance of a 4-45 court to carry out an act authorized by the power of attorney; 4-46 (7) engage, compensate, and discharge an attorney, 4-47 accountant, expert witness, or other assistant; 4-48 (8) keep appropriate records of each transaction, 4-49 including an accounting of receipts and disbursements; 4-50 (9) prepare, execute, and file a record, report, or 4-51 other document the attorney in fact or agent considers necessary or 4-52 desirable to safeguard or promote the principal's interest under a 4-53 statute or governmental regulation; 4-54 (10) reimburse the attorney in fact or agent for 4-55 expenditures made in exercising the powers granted by the durable 4-56 power of attorney; and 4-57 (11) in general, do any other lawful act that the 4-58 principal may do with respect to a transaction. 4-59 Sec. 492. CONSTRUCTION OF POWER RELATING TO REAL PROPERTY 4-60 TRANSACTIONS. In a statutory durable power of attorney, the 4-61 language conferring authority with respect to real property 4-62 transactions empowers the attorney in fact or agent to: 4-63 (1) accept as a gift or as security for a loan or 4-64 reject, demand, buy, lease, receive, or otherwise acquire an 4-65 interest in real property or a right incident to real property; 4-66 (2) sell, exchange, convey with or without covenants, 4-67 quitclaim, release, surrender, mortgage, encumber, partition, 4-68 consent to partitioning, subdivide, apply for zoning, rezoning, or 4-69 other governmental permits, plat or consent to platting, develop, 4-70 grant options concerning, lease or sublet, or otherwise dispose of 5-1 an estate or interest in real property or a right incident to real 5-2 property; 5-3 (3) release, assign, satisfy, and enforce by 5-4 litigation, action, or otherwise a mortgage, deed of trust, 5-5 encumbrance, lien, or other claim to real property that exists or 5-6 is claimed to exist; 5-7 (4) do any act of management or of conservation with 5-8 respect to an interest in real property, or a right incident to 5-9 real property, owned or claimed to be owned by the principal, 5-10 including power to: 5-11 (A) insure against a casualty, liability, or 5-12 loss; 5-13 (B) obtain or regain possession or protect the 5-14 interest or right by litigation, action, or otherwise; 5-15 (C) pay, compromise, or contest taxes or 5-16 assessments or apply for and receive refunds in connection with 5-17 them; and 5-18 (D) purchase supplies, hire assistance or labor, 5-19 or make repairs or alterations in the real property; 5-20 (5) use, develop, alter, replace, remove, erect, or 5-21 install structures or other improvements on real property in which 5-22 the principal has or claims to have an estate, interest, or right; 5-23 (6) participate in a reorganization with respect to 5-24 real property or a legal entity that owns an interest in or right 5-25 incident to real property, receive and hold shares of stock or 5-26 obligations received in a plan or reorganization, and act with 5-27 respect to the shares or obligations, including: 5-28 (A) selling or otherwise disposing of the shares 5-29 or obligations; 5-30 (B) exercising or selling an option, conversion, 5-31 or similar right with respect to the shares or obligations; and 5-32 (C) voting the shares or obligations in person 5-33 or by proxy; 5-34 (7) change the form of title of an interest in or 5-35 right incident to real property; and 5-36 (8) dedicate easements or other real property in which 5-37 the principal has or claims to have an interest to public use, with 5-38 or without consideration. 5-39 Sec. 493. CONSTRUCTION OF POWER RELATING TO TANGIBLE 5-40 PERSONAL PROPERTY TRANSACTIONS. In a statutory durable power of 5-41 attorney, the language conferring general authority with respect to 5-42 tangible personal property transactions empowers the attorney in 5-43 fact or agent to: 5-44 (1) accept as a gift or as security for a loan, 5-45 reject, demand, buy, receive, or otherwise acquire ownership or 5-46 possession of tangible personal property or an interest in tangible 5-47 personal property; 5-48 (2) sell, exchange, convey with or without covenants, 5-49 release, surrender, mortgage, encumber, pledge, hypothecate, create 5-50 a security interest in, pawn, grant options concerning, lease or 5-51 sublet to others, or otherwise dispose of tangible personal 5-52 property or an interest in tangible personal property; 5-53 (3) release, assign, satisfy, or enforce by 5-54 litigation, action, or otherwise a mortgage, security interest, 5-55 encumbrance, lien, or other claim on behalf of the principal, with 5-56 respect to tangible personal property or an interest in tangible 5-57 personal property; and 5-58 (4) do an act of management or conservation with 5-59 respect to tangible personal property or an interest in tangible 5-60 personal property on behalf of the principal, including: 5-61 (A) insuring against casualty, liability, or 5-62 loss; 5-63 (B) obtaining or regaining possession or 5-64 protecting the property or interest by litigation, action, or 5-65 otherwise; 5-66 (C) paying, compromising, or contesting taxes or 5-67 assessments or applying for and receiving refunds in connection 5-68 with taxes or assessments; 5-69 (D) moving from place to place; 5-70 (E) storing for hire or on a gratuitous 6-1 bailment; and 6-2 (F) using, altering, and making repairs or 6-3 alterations. 6-4 Sec. 494. CONSTRUCTION OF POWER RELATING TO STOCK AND BOND 6-5 TRANSACTIONS. In a statutory durable power of attorney, the 6-6 language conferring authority with respect to stock and bond 6-7 transactions empowers the attorney in fact or agent to buy, sell, 6-8 and exchange stocks, bonds, mutual funds, and all other types of 6-9 securities and financial instruments other than commodity futures 6-10 contracts and call and put options on stocks and stock indexes, 6-11 receive certificates and other evidences of ownership with respect 6-12 to securities, exercise voting rights with respect to securities in 6-13 person or by proxy, enter into voting trusts, and consent to 6-14 limitations on the right to vote. 6-15 Sec. 495. CONSTRUCTION OF POWER RELATING TO COMMODITY AND 6-16 OPTION TRANSACTIONS. In a statutory durable power of attorney, the 6-17 language conferring authority with respect to commodity and option 6-18 transactions empowers the attorney in fact or agent to buy, sell, 6-19 exchange, assign, settle, and exercise commodity futures contracts 6-20 and call and put options on stocks and stock indexes traded on a 6-21 regulated options exchange and establish, continue, modify, or 6-22 terminate option accounts with a broker. 6-23 Sec. 496. CONSTRUCTION OF POWER RELATING TO BANKING AND 6-24 OTHER FINANCIAL INSTITUTION TRANSACTIONS. In a statutory durable 6-25 power of attorney, the language conferring authority with respect 6-26 to banking and other financial institution transactions empowers 6-27 the attorney in fact or agent to: 6-28 (1) continue, modify, or terminate an account or other 6-29 banking arrangement made by or on behalf of the principal; 6-30 (2) establish, modify, or terminate an account or 6-31 other banking arrangement with a bank, trust company, savings and 6-32 loan association, credit union, thrift company, brokerage firm, or 6-33 other financial institution selected by the attorney in fact or 6-34 agent; 6-35 (3) hire a safe deposit box or space in a vault; 6-36 (4) contract to procure other services available from 6-37 a financial institution as the attorney in fact or agent considers 6-38 desirable; 6-39 (5) withdraw by check, order, or otherwise money or 6-40 property of the principal deposited with or left in the custody of 6-41 a financial institution; 6-42 (6) receive bank statements, vouchers, notices, or 6-43 similar documents from a financial institution and act with respect 6-44 to them; 6-45 (7) enter a safe deposit box or vault and withdraw or 6-46 add to the contents; 6-47 (8) borrow money at an interest rate agreeable to the 6-48 attorney in fact or agent and pledge as security real or personal 6-49 property of the principal necessary to borrow, pay, renew, or 6-50 extend the time of payment of a debt of the principal; 6-51 (9) make, assign, draw, endorse, discount, guarantee, 6-52 and negotiate promissory notes, bills of exchange, checks, drafts, 6-53 or other negotiable or nonnegotiable paper of the principal, or 6-54 payable to the principal or the principal's order, to receive the 6-55 cash or other proceeds of those transactions, to accept a draft 6-56 drawn by a person on the principal, and to pay the principal when 6-57 due; 6-58 (10) receive for the principal and act on a sight 6-59 draft, warehouse receipt, or other negotiable or nonnegotiable 6-60 instrument; 6-61 (11) apply for and receive letters of credit, credit 6-62 cards, and traveler's checks from a financial institution and give 6-63 an indemnity or other agreement in connection with letters of 6-64 credit; and 6-65 (12) consent to an extension of the time of payment 6-66 with respect to commercial paper or a financial transaction with a 6-67 financial institution. 6-68 Sec. 497. CONSTRUCTION OF POWER RELATING TO BUSINESS 6-69 OPERATING TRANSACTIONS. In a statutory durable power of attorney, 6-70 the language conferring authority with respect to business 7-1 operating transactions empowers the attorney in fact or agent to: 7-2 (1) operate, buy, sell, enlarge, reduce, or terminate 7-3 a business interest; 7-4 (2) to the extent that an agent is permitted by law to 7-5 act for a principal and subject to the terms of the partnership 7-6 agreement: 7-7 (A) perform a duty or discharge a liability or 7-8 exercise a right, power, privilege, or option that the principal 7-9 has, may have, or claims to have under a partnership agreement, 7-10 whether or not the principal is a general or limited partner; 7-11 (B) enforce the terms of a partnership agreement 7-12 by litigation, action, or otherwise; and 7-13 (C) defend, submit to arbitration, settle, or 7-14 compromise litigation or an action to which the principal is a 7-15 party because of membership in the partnership; 7-16 (3) exercise in person or by proxy or enforce by 7-17 litigation, action, or otherwise a right, power, privilege, or 7-18 option the principal has or claims to have as the holder of a bond, 7-19 share, or other instrument of similar character and defend, submit 7-20 to arbitration, settle, or compromise a legal proceeding to which 7-21 the principal is a party because of a bond, share, or similar 7-22 instrument; 7-23 (4) with respect to a business owned solely by the 7-24 principal: 7-25 (A) continue, modify, renegotiate, extend, and 7-26 terminate a contract made with an individual or a legal entity, 7-27 firm, association, or corporation by or on behalf of the principal 7-28 with respect to the business before execution of the power of 7-29 attorney; 7-30 (B) determine: 7-31 (i) the location of its operation; 7-32 (ii) the nature and extent of its 7-33 business; 7-34 (iii) the methods of manufacturing, 7-35 selling, merchandising, financing, accounting, and advertising 7-36 employed in its operation; 7-37 (iv) the amount and types of insurance 7-38 carried; and 7-39 (v) the mode of engaging, compensating, 7-40 and dealing with its accountants, attorneys, and other agents and 7-41 employees; 7-42 (C) change the name or form of organization 7-43 under which the business is operated and enter into a partnership 7-44 agreement with other persons or organize a corporation to take over 7-45 all or part of the operation of the business; and 7-46 (D) demand and receive money due or claimed by 7-47 the principal or on the principal's behalf in the operation of the 7-48 business and control and disburse the money in the operation of the 7-49 business; 7-50 (5) put additional capital into a business in which 7-51 the principal has an interest; 7-52 (6) join in a plan of reorganization, consolidation, 7-53 or merger of the business; 7-54 (7) sell or liquidate a business or part of it at the 7-55 time and on the terms that the attorney in fact or agent considers 7-56 desirable; 7-57 (8) establish the value of a business under a buy-out 7-58 agreement to which the principal is a party; 7-59 (9) prepare, sign, file, and deliver reports, 7-60 compilations of information, returns, or other papers with respect 7-61 to a business that are required by a governmental agency, 7-62 department, or instrumentality or that the attorney in fact or 7-63 agent considers desirable and make related payments; and 7-64 (10) pay, compromise, or contest taxes or assessments 7-65 and do any other act that the attorney in fact or agent considers 7-66 desirable to protect the principal from illegal or unnecessary 7-67 taxation, fines, penalties, or assessments with respect to a 7-68 business, including attempts to recover, in any manner permitted by 7-69 law, money paid before or after the execution of the power of 7-70 attorney. 8-1 Sec. 498. CONSTRUCTION OF POWER RELATING TO INSURANCE 8-2 TRANSACTIONS. In a statutory durable power of attorney, the 8-3 language conferring authority with respect to insurance and annuity 8-4 transactions empowers the attorney in fact or agent to: 8-5 (1) continue, pay the premium or assessment on, 8-6 modify, rescind, release, or terminate a contract procured by or on 8-7 behalf of the principal that insures or provides an annuity to 8-8 either the principal or another person, whether or not the 8-9 principal is a beneficiary under the contract; 8-10 (2) procure new, different, or additional contracts of 8-11 insurance and annuities for the principal or the principal's 8-12 spouse, children, and other dependents and select the amount, type 8-13 of insurance or annuity, and mode of payment; 8-14 (3) pay the premium or assessment on or modify, 8-15 rescind, release, or terminate a contract of insurance or annuity 8-16 procured by the attorney in fact or agent; 8-17 (4) designate the beneficiary of the contract, except 8-18 that an attorney in fact or agent may be named a beneficiary of the 8-19 contract or an extension, renewal, or substitute for the contract 8-20 only to the extent the attorney in fact or agent was named as a 8-21 beneficiary under a contract procured by the principal before 8-22 executing the power of attorney; 8-23 (5) apply for and receive a loan on the security of 8-24 the contract of insurance or annuity; 8-25 (6) surrender and receive the cash surrender value; 8-26 (7) exercise an election; 8-27 (8) change the manner of paying premiums; 8-28 (9) change or convert the type of insurance contract 8-29 or annuity with respect to which the principal has or claims to 8-30 have a power described in this section; 8-31 (10) change the beneficiary of a contract of insurance 8-32 or annuity, except that the attorney in fact or agent may be 8-33 designated a beneficiary only to the extent authorized by 8-34 Subdivision (4) of this section; 8-35 (11) apply for and procure government aid to guarantee 8-36 or pay premiums of a contract of insurance on the life of the 8-37 principal; 8-38 (12) collect, sell, assign, hypothecate, borrow on, or 8-39 pledge the interest of the principal in a contract of insurance or 8-40 annuity; and 8-41 (13) pay from proceeds or otherwise, compromise or 8-42 contest, or apply for refunds in connection with a tax or 8-43 assessment levied by a taxing authority with respect to a contract 8-44 of insurance or annuity or its proceeds or liability accruing 8-45 because of the tax or assessment. 8-46 Sec. 499. CONSTRUCTION OF POWER RELATING TO ESTATE, TRUST, 8-47 AND OTHER BENEFICIARY TRANSACTIONS. In a statutory durable power 8-48 of attorney, the language conferring authority with respect to 8-49 estate, trust, and other beneficiary transactions empowers the 8-50 attorney in fact or agent to act for the principal in all matters 8-51 that affect a trust, probate estate, guardianship, conservatorship, 8-52 escrow, custodianship, or other fund from which the principal is, 8-53 may become, or claims to be entitled, as a beneficiary, to a share 8-54 or payment, including to: 8-55 (1) accept, reject, disclaim, receive, receipt for, 8-56 sell, assign, release, pledge, exchange, or consent to a reduction 8-57 in or modification of a share in or payment from the fund; 8-58 (2) demand or obtain by litigation, action, or 8-59 otherwise money or any other thing of value to which the principal 8-60 is, may become, or claims to be entitled because of the fund; 8-61 (3) initiate, participate in, or oppose a legal or 8-62 judicial proceeding to ascertain the meaning, validity, or effect 8-63 of a deed, will, declaration of trust, or other instrument or 8-64 transaction affecting the interest of the principal; 8-65 (4) initiate, participate in, or oppose a legal or 8-66 judicial proceeding to remove, substitute, or surcharge a 8-67 fiduciary; 8-68 (5) conserve, invest, disburse, or use anything 8-69 received for an authorized purpose; and 8-70 (6) transfer all or part of an interest of the 9-1 principal in real property, stocks, bonds, accounts with financial 9-2 institutions, insurance, and other property to the trustee of a 9-3 revocable trust created by the principal as settlor. 9-4 Sec. 500. CONSTRUCTION OF POWER RELATING TO CLAIMS AND 9-5 LITIGATION. In a statutory durable power of attorney, the language 9-6 conferring general authority with respect to claims and litigation 9-7 empowers the attorney in fact or agent to: 9-8 (1) assert and prosecute before a court or 9-9 administrative agency a claim, a claim for relief, a counterclaim, 9-10 or an offset or defend against an individual, a legal entity, or a 9-11 government, including suits to recover property or other thing of 9-12 value, to recover damages sustained by the principal, to eliminate 9-13 or modify tax liability, or to seek an injunction, specific 9-14 performance, or other relief; 9-15 (2) bring an action to determine adverse claims, 9-16 intervene in an action or litigation, and act as amicus curiae; 9-17 (3) in connection with an action or litigation, 9-18 procure an attachment, garnishment, libel, order of arrest, or 9-19 other preliminary, provisional, or intermediate relief and use an 9-20 available procedure to effect or satisfy a judgment, order, or 9-21 decree; 9-22 (4) in connection with an action or litigation, 9-23 perform any lawful act the principal could perform, including 9-24 acceptance of tender, offer of judgment, admission of facts, 9-25 submission of a controversy on an agreed statement of facts, 9-26 consent to examination before trial, and binding of the principal 9-27 in litigation; 9-28 (5) submit to arbitration, settle, and propose or 9-29 accept a compromise with respect to a claim or litigation; 9-30 (6) waive the issuance and service of process on the 9-31 principal, accept service of process, appear for the principal, 9-32 designate persons on whom process directed to the principal may be 9-33 served, execute and file or deliver stipulations on the principal's 9-34 behalf, verify pleadings, seek appellate review, procure and give 9-35 surety and indemnity bonds, contract and pay for the preparation 9-36 and printing of records and briefs, receive and execute and file or 9-37 deliver a consent, waiver, release, confession of judgment, 9-38 satisfaction of judgment, notice, agreement, or other instrument in 9-39 connection with the prosecution, settlement, or defense of a claim 9-40 or litigation; 9-41 (7) act for the principal with respect to bankruptcy 9-42 or insolvency proceedings, whether voluntary or involuntary, 9-43 concerning the principal or some other person, with respect to a 9-44 reorganization proceeding or a receivership or application for the 9-45 appointment of a receiver or trustee that affects an interest of 9-46 the principal in real or personal property or other thing of value; 9-47 and 9-48 (8) pay a judgment against the principal or a 9-49 settlement made in connection with a claim or litigation and 9-50 receive and conserve money or other thing of value paid in 9-51 settlement of or as proceeds of a claim or litigation. 9-52 Sec. 501. CONSTRUCTION OF POWER RELATING TO PERSONAL AND 9-53 FAMILY MAINTENANCE. In a statutory durable power of attorney, the 9-54 language conferring authority with respect to personal and family 9-55 maintenance empowers the attorney in fact or agent to: 9-56 (1) perform the acts necessary to maintain the 9-57 customary standard of living of the principal, the principal's 9-58 spouse and children, and other individuals customarily or legally 9-59 entitled to be supported by the principal, including providing 9-60 living quarters by purchase, lease, or other contract, or paying 9-61 the operating costs, including interest, amortization payments, 9-62 repairs, and taxes on premises owned by the principal and occupied 9-63 by those individuals; 9-64 (2) provide for the individuals described by 9-65 Subdivision (1) of this section normal domestic help, usual 9-66 vacations and travel expenses, and funds for shelter, clothing, 9-67 food, appropriate education, and other current living costs; 9-68 (3) pay necessary medical, dental, and surgical care, 9-69 hospitalization, and custodial care for the individuals described 9-70 by Subdivision (1) of this section; 10-1 (4) continue any provision made by the principal, for 10-2 the individuals described by Subdivision (1) of this section, for 10-3 automobiles or other means of transportation, including 10-4 registering, licensing, insuring, and replacing the automobiles or 10-5 other means of transportation; 10-6 (5) maintain or open charge accounts for the 10-7 convenience of the individuals described by Subdivision (1) of this 10-8 section and open new accounts the attorney in fact or agent 10-9 considers desirable to accomplish a lawful purpose; and 10-10 (6) continue payments incidental to the membership or 10-11 affiliation of the principal in a church, club, society, order, or 10-12 other organization or to continue contributions to those 10-13 organizations. 10-14 Sec. 502. CONSTRUCTION OF POWER RELATING TO BENEFITS FROM 10-15 CERTAIN GOVERNMENTAL PROGRAMS OR CIVIL OR MILITARY SERVICE. In a 10-16 statutory durable power of attorney, the language conferring 10-17 authority with respect to benefits from social security, Medicare, 10-18 Medicaid, or other governmental programs or civil or military 10-19 service empowers the attorney in fact or agent to: 10-20 (1) execute vouchers in the name of the principal for 10-21 allowances and reimbursements payable by the United States, a 10-22 foreign government, or a state or subdivision of a state to the 10-23 principal, including allowances and reimbursements for 10-24 transportation of the individuals described by Section 501(1) of 10-25 this code, and for shipment of their household effects; 10-26 (2) take possession and order the removal and shipment 10-27 of property of the principal from a post, warehouse, depot, dock, 10-28 or other place of storage or safekeeping, either governmental or 10-29 private, and execute and deliver a release, voucher, receipt, bill 10-30 of lading, shipping ticket, certificate, or other instrument for 10-31 that purpose; 10-32 (3) prepare, file, and prosecute a claim of the 10-33 principal to a benefit or assistance, financial or otherwise, to 10-34 which the principal claims to be entitled under a statute or 10-35 governmental regulation; 10-36 (4) prosecute, defend, submit to arbitration, settle, 10-37 and propose or accept a compromise with respect to any benefits the 10-38 principal may be entitled to receive; and 10-39 (5) receive the financial proceeds of a claim of the 10-40 type described in this section and conserve, invest, disburse, or 10-41 use anything received for a lawful purpose. 10-42 Sec. 503. CONSTRUCTION OF POWER RELATING TO RETIREMENT PLAN 10-43 TRANSACTIONS. In a statutory durable power of attorney, the 10-44 language conferring authority with respect to retirement plan 10-45 transactions empowers the attorney in fact or agent to do any 10-46 lawful act the principal may do with respect to a transaction 10-47 relating to a retirement plan, including to: 10-48 (1) apply for service or disability retirement 10-49 benefits; 10-50 (2) select payment options under any retirement plan 10-51 in which the principal participates, including plans for 10-52 self-employed individuals; 10-53 (3) designate or change the designation of a 10-54 beneficiary or benefits payable by a retirement plan, except that 10-55 an attorney in fact or agent may be named a beneficiary only to the 10-56 extent the attorney in fact or agent was a named beneficiary under 10-57 the retirement plan before the durable power of attorney was 10-58 executed; 10-59 (4) make voluntary contributions to retirement plans 10-60 if authorized by the plan; 10-61 (5) exercise the investment powers available under any 10-62 self-directed retirement plan; 10-63 (6) make "rollovers" of plan benefits into other 10-64 retirement plans; 10-65 (7) borrow from, sell assets to, and purchase assets 10-66 from retirement plans if authorized by the plan; 10-67 (8) waive the right of the principal to be a 10-68 beneficiary of a joint or survivor annuity if the principal is a 10-69 spouse who is not employed; 10-70 (9) receive, endorse, and cash payments from a 11-1 retirement plan; 11-2 (10) waive the right of the principal to receive all 11-3 or a portion of benefits payable by a retirement plan; and 11-4 (11) request and receive information relating to the 11-5 principal from retirement plan records. 11-6 Sec. 504. CONSTRUCTION OF POWER RELATING TO TAX MATTERS. In 11-7 a statutory durable power of attorney, the language conferring 11-8 authority with respect to tax matters empowers the attorney in fact 11-9 or agent to: 11-10 (1) prepare, sign, and file federal, state, local, and 11-11 foreign income, gift, payroll, Federal Insurance Contributions Act, 11-12 and other tax returns, claims for refunds, requests for extension 11-13 of time, petitions regarding tax matters, and any other tax-related 11-14 documents, including receipts, offers, waivers, consents, including 11-15 consents and agreements under Section 2032A, Internal Revenue Code 11-16 of 1986 (26 U.S.C. Section 2032A), closing agreements, and any 11-17 power of attorney form required by the Internal Revenue Service or 11-18 other taxing authority with respect to a tax year on which the 11-19 statute of limitations has not run and 25 tax years following that 11-20 tax year; 11-21 (2) pay taxes due, collect refunds, post bonds, 11-22 receive confidential information, and contest deficiencies 11-23 determined by the Internal Revenue Service or other taxing 11-24 authority; 11-25 (3) exercise any election available to the principal 11-26 under federal, state, local, or foreign tax law; and 11-27 (4) act for the principal in all tax matters for all 11-28 periods before the Internal Revenue Service and any other taxing 11-29 authority. 11-30 Sec. 505. EXISTING INTEREST; FOREIGN INTERESTS. The powers 11-31 described in Sections 492 through 504 of this code may be exercised 11-32 equally with respect to an interest the principal has at the time 11-33 the durable power of attorney is executed or acquires later, 11-34 whether or not the property is located in this state and whether or 11-35 not the powers are exercised or the durable power of attorney is 11-36 executed in this state. 11-37 Sec. 506. UNIFORMITY OF APPLICATION AND CONSTRUCTION. This 11-38 chapter shall be applied and construed to effect its general 11-39 purpose to make uniform the law with respect to the subject of this 11-40 chapter among states enacting it. 11-41 SECTION 2. Section 36A, Probate Code, is repealed. A power 11-42 of attorney executed in compliance with that section before the 11-43 effective date of this Act is valid according to the terms of that 11-44 section as it existed at the time of the execution, and that 11-45 section is continued in effect for that purpose. 11-46 SECTION 3. This Act takes effect September 1, 1993. 11-47 SECTION 4. The importance of this legislation and the 11-48 crowded condition of the calendars in both houses create an 11-49 emergency and an imperative public necessity that the 11-50 constitutional rule requiring bills to be read on three several 11-51 days in each house be suspended, and this rule is hereby suspended. 11-52 * * * * * 11-53 Austin, 11-54 Texas 11-55 February 9, 1993 11-56 Hon. Bob Bullock 11-57 President of the Senate 11-58 Sir: 11-59 We, your Committee on Jurisprudence to which was referred S.B. No. 11-60 176, have had the same under consideration, and I am instructed to 11-61 report it back to the Senate with the recommendation that it do not 11-62 pass, but that the Committee Substitute adopted in lieu thereof do 11-63 pass and be printed. 11-64 Henderson, 11-65 Chairman 11-66 * * * * * 11-67 WITNESSES 11-68 FOR AGAINST ON 11-69 ___________________________________________________________________ 11-70 Name: Alvin Golden x 12-1 Representing: State Bar (reptl section) 12-2 City: Austin 12-3 ------------------------------------------------------------------- 12-4 Name: Dianne Hughes x 12-5 Representing: Trust Finance Service 12-6 Division 12-7 City: Austin 12-8 ------------------------------------------------------------------- 12-9 Name: Karen M. Neeley x 12-10 Representing: Independent Bankers Assn 12-11 oftx 12-12 City: Austin 12-13 -------------------------------------------------------------------