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As a part of many estate and elder law plans, an elder law attorney will draft a financial power of attorney for a client. The client, as the principal, names another person, an agent, to act on their behalf. The power of attorney can be effective immediately, meaning the agent can act even if the principal has capacity. Or, the power of attorney can be springing, meaning the agent can only act if the principal becomes incapacitated and unable to manage his or her own financial affairs. But what happens if an agent begins to act under the document before the springing provision has been satisfied? Are the agent’s acts legally binding?

In a case out of the Superior Court of Pennsylvania, this issue was litigated. Here, Mercedes had six children. In 2013, she named child Joseph as her agent on a power of attorney form that Joseph had downloaded off the Internet. Therein was a clause that stated Mercedes must be incapacitated or disabled and there must be a physician’s statement to that effect before the power of attorney became effective and Joseph would be able to act. However, Joseph began acting as Mercedes’ agent immediately after signing the document, in routine financial affairs. Mercedes had not been declared incompetent and had not obtained a written physician’s statement.

The Corporate Transparency Act of 2020 (CTA), passed on January 1, 2021, is designed to prevent malign actors, i.e., companies that seek to conceal their ownership of businesses in the United States in an effort to facilitate illicit activity such as money laundering, financing of terrorism, tax fraud, and other acts of foreign corruption, from harming the national security interests of the United States and its allies. But why should this be of any interest to estate planners?