Practical Issues Concerning POA Transactions

Practical Issues Concerning
Durable Power of Attorney Transactions
DAVID F. JOHNSON
Winstead PC
300 Throckmorton, Suite 1700
Fort Worth, Texas 76102
817-420-8223
DAVID FOWLER JOHNSON
DFJOHNSON@WINSTEAD.COM
www.txfiduciarylitigator.com
Managing Shareholder of Winstead PC’s Fort Worth Office
300 Throckmorton, Suite 1700
Fort Worth, Texas 76102
(817) 420-8223
David maintains an active trial and appellate practice for the financial services industry. David is the
primary author of the Texas Fiduciary Litigator blog (txfiduciarylitigator.com), which reports on legal cases and
issues impacting the fiduciary field in Texas. David’s financial institution experience includes (but is not limited to):
account litigation, breach of contract, foreclosure litigation, lender liability, receivership and injunction remedies
upon default, non-recourse and other real estate lending, class action, RICO actions, usury, various tort causes of
action, breach of fiduciary duty claims, and preference and other related claims raised by receivers.
David has specialized in trust and estate disputes including: trust modification/clarification/reformation,
trustee resignation/removal, breach of fiduciary duty and related claims, accountings, will contests, mental
competency issues, and undue influence. David’s recent trial experience includes:
Represented a trustee in federal class action suit where trust beneficiaries challenged whether it
was the authorized trustee of over 220 trusts;
Represented trustees regarding claims of mismanagement of assets;
Represented a trustee regarding dispute over the failure to make distributions;
Represented a trustee/bank regarding a negligence claim arising from investments from an IRA
account;
Represented individuals in will contests arising from claims of undue influence and mental
incompetence;
Represented estate representatives against claims raised by a beneficiary for breach of fiduciary
duty;
Represented beneficiaries against estate representatives for breach of fiduciary duty and other
related claims; and
Represented estate representatives, trustees, and beneficiaries regarding accountings and related
claims.
David is one of twenty attorneys in the state (of the 84,000 licensed) that has the triple Board Certification
in Civil Trial Law, Civil Appellate, and Personal Injury Trial Law by the Texas Board of Legal Specialization.
Additionally, David was a member of the Civil Trial Law Commission of the Texas Board of Legal Specialization.
This commission writes and grades the exam for new applicants for civil trial law certification. David is a graduate
of Baylor University School of Law, Magna Cum Laude, and Baylor University, B.B.A. in Accounting.
David has published over twenty (20) law review articles on various litigation topics. David’s articles have
been cited as authority by: federal courts, the Texas Supreme Court (three times), the Texas courts of appeals (El
Paso, Waco, Texarkana, Tyler, Beaumont, and Houston), McDonald and Carlson in their Texas Civil Practice
treatise, William V. Dorsaneo in the Texas Litigation Guide, Baylor Law Review, South Texas Law Review, and the
Tennessee Law Review. David has presented and/or prepared written materials for over one hundred and fifty (150)
continuing legal education courses.
TABLE OF CONTENTS
I. INTRODUCTION ........................................................................................................................... 1
II. THE DURABLE POWER OF ATTORNEY ACT ......................................................................... 1
A. Introduction......................................................................................................................... 1
B. Application of Statute ......................................................................................................... 2
C. Definition of Durable Power of Attorney ........................................................................... 2
D. Agent’s Acceptance of Duties ............................................................................................ 3
E. Effect of Court-Appointed Guardian of the Estate ............................................................. 3
F. Effect of Bankruptcy ........................................................................................................... 3
G. Agent’s Right to Reimbursement and Compensation ......................................................... 3
H. Powers Of Attorneys From Other Jurisdictions .................................................................. 3
I. Conflict-Of-Law Issues....................................................................................................... 4
J. Agent’s Powers ................................................................................................................... 4
1. Grants of Authority ................................................................................................ 4
2. Limitations on General Authority .......................................................................... 5
3. Statutory DPOA Form ........................................................................................... 6
4. Construction of DPOA In General......................................................................... 6
5. General Power For Real Estate Transactions......................................................... 7
6. General Power Over Tangible Personal Property .................................................. 9
7. General Power Over Stock and Bond and Commodity and Option Transactions10
8. General Power Over Banking and Other Financial Institution Transactions....... 11
9. General Power Over Business Operation Transactions ....................................... 12
10. General Power of Insurance and Annuity Transactions....................................... 13
11. General Power Over Estate, Trust, and Other Beneficiary Transactions............. 14
12. General Power Over Claims and Litigation ......................................................... 15
13. General Power Over Personal and Family Maintenance ..................................... 16

14. Power Over Benefits From Governmental Programs or Civil or Military Service
............................................................................................................................. 17
15. Power Over Retirement Plan Transactions .......................................................... 17
16. Power Over Tax Matters ...................................................................................... 18
17. Power to Create or Change Beneficiary Designations ......................................... 19
K. Agent’s Duties .................................................................................................................. 20
L. Persons Now Generally Required To Accept Power Of Attorney Documents

(With Limited Exceptions) ............................................................................................... 21
M. Timeline Considerations ................................................................................................... 22
N. When Does The Agent Present The Power Of Attorney To Start The Clock? ................. 22
O. Person Cannot Request Alternative POA Form And Originals Are Not Required .......... 23
P. Agent’s Certification......................................................................................................... 24
Q. Physician’s Written Statement .......................................................................................... 24
R. Opinion Of Counsel .......................................................................................................... 25
S. English Translation ........................................................................................................... 25
T. Person Accepting Power Of Attorney Has Defenses ........................................................ 26
U. Defenses and Protections for Person Accepting POA Could Be Broader ........................ 27
V. Grounds For Refusing Acceptance ................................................................................... 28
W. Party Refusing A Power Of Attorney Must Give A Timely Response............................. 30
X. New Vulnerable Persons Statute Impacts Use of Power of Attorney Documents ............ 30
Y. Cause Of Action For Wrongfully Refusing Power Of Attorney ...................................... 31
Z. Person May Bring Suit To Construe Power Of Attorney ................................................. 31
AA. Agent Can Change Rights of Survivorship And Beneficiary Designations If

Granted That Authority ..................................................................................................... 32
1. Power To Create Or Modify Survivorship And Beneficiary Rights .................... 32
2. Agent’s Gifting Powers ....................................................................................... 33
3. Duty To Preserve Principal’s Estate Plan ............................................................ 33
4. Concern With New Provisions Broadening Agent’s Authority ........................... 33

BB. Recent Cases Dealing With Powers of Attorney Documents ........................................... 34
III. EXPLOITATION OF VULNERABLE PERSONS STATUTE.................................................... 38
A. Introduction....................................................................................................................... 38
B. Definitions Of Vulnerable Person And Financial Exploitation ........................................ 38
C. Financial Institutions......................................................................................................... 39
1. Employee Reporting Obligation .......................................................................... 39
2. Financial Institution Reporting Obligation .......................................................... 39
3. Who Are “Account Holders”? ............................................................................. 39
4. Financial Institution’s Ability To Place A Hold On Transactions ....................... 40
5. Duty To Create Policies ....................................................................................... 40
6. Immunity.............................................................................................................. 41
7. Records ................................................................................................................ 41
D. Securities Dealers and Financial Advisers ........................................................................ 41
1. Professionals’ Duties To Report. ......................................................................... 41
2. Dealer’s/Investment Adviser’s Duty To Report .................................................. 41
3. Duty To Create Policies ....................................................................................... 41
4. Ability To Place Hold On Transactions ............................................................... 41
5. Immunity.............................................................................................................. 42
6. Records ................................................................................................................ 42
E. Other Reporting Duties ..................................................................................................... 42
F. Application of U.C.C. Section 3.307 To Notice Of Financial Exploitation ..................... 43
G. New Provisions Application To Aiding And Abetting Breach Of Fiduciary Duty,

Knowing Participation, Or Conspiracy ............................................................................. 44
H. Conclusion Regarding Financial Exploitation Statutes .................................................... 45
IV. SUSPICIOUS ACTIVITY REPORTS .......................................................................................... 46
A. Reporting Requirements. .................................................................................................. 46
B. Time for Reporting. .......................................................................................................... 46

C. Where to File. ................................................................................................................... 47
D. Failure to File. ................................................................................................................... 47
E. Notification to the Bank's Board of Directors................................................................... 47
F. Confidentiality. ................................................................................................................. 47
G. Liability for Disclosure of Information............................................................................. 48
H. SARs and Financial Exploitation ...................................................................................... 48
V. CRIMINAL STATUTES ............................................................................................................... 51
A. Misapplication Of Fiduciary Property .............................................................................. 51
B. Financial Exploitation Of The Elderly.............................................................................. 52
C. Criminal Statutes Do Not Create Civil Liability............................................................... 53
D. Courts Can Award Restitution In A Criminal Case .......................................................... 53
VI. CONCLUSION .............................................................................................................................. 54

I. INTRODUCTION Durable Power of Attorney Act
intended to ensure that validly-
Historically, in Texas, financial institutions and executed durable powers of
others did not have to accept a power of attorney attorney (DPOA) can be used
document. If an agent wanted to conduct a more effectively in Texas, in
transaction, the financial institution could furtherance of the legislative
demand alternative power of attorney forms, that goal of reducing the need for
the principal conduct it, or simply refuse to do it. guardianship proceedings, and
to provide additional powers to
The Texas Legislature has instituted broad the designated agents. DPOAs
changes to the Texas Estates Code’s Texas are vital for planning for the
Durable Power of Attorney Act regarding possibility of incapacity, and are
durable power of attorney provisions. A new specifically included as an
aspect of the statutory provisions is to make sure alternative to guardianship
that financial institutions and others accept under the Estates Code. But
power of attorney documents. The provisions many Texas citizens have been
also potentially allow broad additional powers to unable to effectively use
designated agents; powers that would even allow DPOAs due to their rejection for
the agents to benefit themselves from the arbitrary or unexplained
principal’s assets. reasons. H.B. 1974 makes
DPOAs more readily available.
This paper discusses the durable power of
attorney statute, powers that power of attorney Overview: H.B. 1974 makes
agents have and financial institutions’ important changes to the statute
obligations and rights. The paper discusses the by: providing for reasonable
statutory duties to report incidences of financial acceptance of DPOAs in a
exploitation of elderly customers and SAR timely fashion so that
reporting requirements. The Author hopes that guardianship can be avoided;
this paper provides Texas-specific guidance on eliminating risk to persons who
this very important topic that impacts so many in accept DPOAs by allowing
our society. them to rely on an agent’s
certification that the DPOA is
II. THE DURABLE POWER OF valid for the purpose it is being
ATTORNEY ACT presented or an opinion of the
agent’s counsel who is hired at
A. Introduction the principal’s expense; giving
the person who is asked to
The Real Estate, Probate, and Trust Law accept the DPOA numerous
(REPTL) Section of the State Bar of Texas valid reasons to reject, some of
supported HB 1974 because that section wanted which cannot be challenged by
to plan around expensive guardianships by the the principal or agent; and
use of durable power of attorney documents. providing a mechanism to have
Those planners were frustrated by financial a court decide any disputes.
institutions not accepting those documents. The This bill does not require
legislative history provides: someone to automatically accept
a DPOA and does not shift
The Real Estate, Probate, and liability to those who do accept
Trust Law Section of the State a DPOA. Rather, it provides
Bar of Texas (REPTL) proposes new liability protection to those
H.B. 1974, which provides who accept a DPOA without
several changes to the Texas knowledge that it was invalid
PRACTICAL ISSUES CONCERNING DURABLE POWER OF ATTORNEY TRANSACTIONS – PAGE 1

and includes new procedures to individual human being,” “a human being as
properly reject a DPOA. Similar distinguished from an animal or thing”).
provisions have been enacted in However, the term may also include an artificial
30 other states without issue. person, such as a government agency,
partnership, association, corporation, trust, or
B. Application of Statute other legal entity. See, e.g., Tex. Gov’t Code §
311.005 (unless a statute or context employing
The new statutes apply to “(1) durable power of the word or phrase requires a different
attorney, including a statutory durable power of definition, “person,” when used in a statute,
attorney, created before, on or after the effective “includes corporation, organization, government
date of the Act [September 1, 2017]; (2) a or governmental subdivision or agency, business
judicial proceeding concerning a durable power trust, estate, trust, partnership, association, and
of attorney pending on, or commenced after, the any other legal entity”). See also Colorado
effective date of this Act.” Section 16(a), H.B. County v. Staff, 510 S.W.3d 435, n.59 (Tex.
1974. Also, certain provisions [Section 751.024; 2017). Therefore, the term “person” should be
Chapter 751, Subchapters A-2, B, C, and D; and construed very broadly.
Chapter 752] only apply to durable powers of
attorney executed after the date of the Act. Id. at C. Definition of Durable Power of Attorney
16(b). Moreover, if a court finds that the
application of a provision of the new statutes To be a durable power of attorney, the document
would substantially interfere with the effective must be in writing or other record that
conduct of a judicial proceeding or would designates a person as an agent and grants
prejudice the rights of a party, then the court can authority to act in place of the principal, signed
apply the former law for that purpose and in by the principal or another at the principal’s
those circumstances. Id. at 16(d). direction, be acknowledged, and contain words
that: 1) the power of attorney document is not
The new power of attorney statutes apply to affected by the subsequent disability or
durable powers of attorney as that term is incapacity of the principal, 2) the power of
defined in Texas Estates Code Section 751.021. attorney becomes effective on the disability or
Tex. Est. Code Ann. § 751.0015 (“This subtitle incapacity of the principal, or 3) other similar
applies to all durable powers of attorney except: words that clearly indicate that the authority
(1) a power of attorney to the extent it is coupled conferred on the agent shall be exercised
with an interest in the subject of the power, notwithstanding the principal’s subsequent
including a power of attorney given to or for the disability or incapacity. Tex. Est. Code Ann. §
benefit of a creditor in connection with a credit 751.021(a).
transaction; (2) a medical power of attorney …
(3) a proxy or other delegation to exercise voting The power of attorney document must be signed
rights or management rights with respect to an by the principal or another person that the
entity; or (4) a power of attorney created on a principal directs to sign for him or her. Id.
form prescribed by a government or Accordingly, a person that is not physically able
governmental subdivision, agency, or to sign a power of attorney document may
instrumentality for a governmental purpose.”). nonetheless be able to execute the same via
another person.
If the document complies with the statutory
definition of durable power of attorney, then a The Legislature has a form for a statutory
“person” is required to comply with the statute. durable power of attorney. A statutory durable
The term “person” commonly means: “a human power of attorney is legally sufficient if: (1) the
being regarded as an individual.” NEW OXFORD wording of the form complies substantially with
AMERICAN DICTIONARY (3d ed. 2010) the wording of the form prescribed by Section
(“person” means); WEBSTER’S THIRD NEW 752.051; (2) the form is properly completed;
INT’L DICTIONARY (2002) (“person” is “an

and (3) the signature of the principal is power of attorney, on the qualification of the
acknowledged. Tex. Est. Code Ann. § 752.004. guardian the powers and authority granted to the
attorney in fact or agent named in the power of
A signature on the power of attorney is attorney are automatically suspended for the
presumed to be genuine, and the durable power duration of the guardianship unless the court
of attorney is presumed to be executed under the enters an order that: (A) affirms and states the
statute defining a durable power of attorney if effectiveness of the power of attorney; and (B)
the officer taking the acknowledgment has confirms the validity of the appointment of the
complied with Texas Civil Practice and named attorney in fact or agent. Id. If the powers
Remedies Code Section 121.004(b). Id. § and authority of an attorney in fact or agent are
751.0022. That statute provides: “An revoked due to the appointment of a guardian of
acknowledgment or proof of a written the estate, the attorney in fact or agent shall: (1)
instrument may be taken outside this state, but deliver to the guardian of the estate all assets of
inside the United States or its territories, by: (1) the ward’s estate that are in the possession of the
a clerk of a court of record having a seal; (2) a attorney in fact or agent; and (2) account to the
commissioner of deeds appointed under the laws guardian of the estate as the attorney in fact or
of this state; or (3) a notary public.” Tex. Civ. agent would account to the principal if the
Prac. & Rem. Code Ann. § 121.004(b). principal had terminated the powers of the
attorney in fact or agent. Id.
The principal can appoint co-agents, and unless
the power of attorney document provides F. Effect of Bankruptcy
otherwise, each co-agent can exercise authority
independently of the other. Tex. Est. Code Ann. The filing of a voluntary or involuntary petition
§ 751.021. The statutory durable power of in bankruptcy in connection with the debts of a
attorney form expressly has a provision principal who has executed a durable power of
discussing co-agents and their authority to act. attorney does not revoke or terminate the agency
Id. at § 752.051. as to the principal’s agent. Id. at § 751.057.
D. Agent’s Acceptance of Duties G. Agent’s Right to Reimbursement and

Compensation
An agent does not have to sign any document or
make any other declaration regarding accepting The new statute now provides that unless a
the position of agency. Rather, a person accepts durable power of attorney document provides
the appointment simply by exercising authority otherwise, that an agent is entitled to the
or performing duties as an agent or by any other reimbursement of any reasonable expenses
assertion or conduct indicating acceptance of the incurred on the principal’s behalf and
appointment. Tex. Est. Code Ann. § 751.022. compensation that is reasonable under the
circumstances. Tex. Est. Code Ann. § 751.024.
E. Effect of Court-Appointed Guardian of The new durable statutory power of attorney
the Estate form has a provision dealing with an agent’s
right to reimbursement and compensation where
If, after execution of a durable power of the principal has the ability to revoke that right.
attorney, a court appoints a permanent guardian Tex. Est. Code Ann. § 752.051.
of the estate for a ward who is the principal who
executed the power of attorney, on the H. Powers Of Attorneys From Other
qualification of the guardian the powers and Jurisdictions
authority granted to the attorney in fact or agent
named in the power of attorney are A power of attorney document that is executed
automatically revoked. Id. at § 751.052. If a in a different jurisdiction is valid in Texas if,
court appoints a temporary guardian of the estate when executed, the execution complied with:
for a ward who is the principal who executed the “(1) the law of the jurisdiction that determines

the meaning and effect of the durable power of Regarding the construction of powers of
attorney as provided by Section 751.0024; or (2) attorney and the statutes, courts should construe
the requirements for a military power of attorney them to make them uniform “to the fullest extent
as provided by 10 U.S.C. Section 1044b.” Tex. possible” with the laws of other states with
Est. Code Ann. § 751.0023(b). similar provisions. Id. at § 751.003.
Accordingly, though not binding, persuasive
Section 751.0024 provides that the meaning and authority from other states should be considered
effect of a durable power of attorney is by courts in construing Texas powers of
determined by the law of the jurisdiction attorneys and the statutes.
indicated in the document. Id. at § 751.0024. If
the document does not designate the controlling J. Agent’s Powers
law, then it is controlled by the law of the
jurisdiction of the principal’s domicile if the 1. Grants of Authority
principal’s domicile is indicated in the
document. If the domicile is not indicated, then A durable power of attorney document can grant
the document is controlled by law of the to an agent a narrow authority to perform one or
jurisdiction in which the principal executed the a few acts. If so, the document should be
document. Id. It should be noted that the new construed to allow just those acts and no other.
statutory durable power of attorney form However, if a durable power of attorney grants
expressly states that it is controlled by Texas to an agent the authority to perform all acts that
law. Id. at § 752.051. the principal could perform, the agent has the
general authority conferred below. Id. at §
Power of attorney documents prepared in other 751.031(a).
jurisdictions generally follow the law of that
jurisdiction regarding whether it is a durable An agent has authority described in the general
power of attorney. Id. § 751.021(b). “If the law powers section below if the durable power of
of a jurisdiction other than this state determines attorney refers to general authority with respect
the meaning and effect of a writing or other to the descriptive term for the subjects stated in
record that grants authority to an agent to act in Chapter 752 or cites the section in which the
the place of the principal, regardless of whether authority is described. Id. at § 751.034. “A
the term ‘power of attorney’ is used, and that reference in a durable power of attorney to
law provides that the authority conferred on the general authority with respect to the descriptive
agent is exercisable notwithstanding the term for a subject in Chapter 752 or a citation to
principal’s subsequent disability or incapacity, one of those sections incorporates the entire
the writing or other record is considered a section as if the section were set out in its
durable power of attorney under this subtitle.” entirety in the power of attorney.” Id. “A
Id. principal may modify authority incorporated by
reference.” Id.
I. Conflict-Of-Law Issues
In Wise v. Mitchell, a power of attorney holder,
The durable power of attorney act does not Mitchell, filed a revocation of a deed that the
supersede any other law applicable to financial principal issued to Wise. No. 05-15-00610-CV,
institutions or other entities, and to an extent that 2016 Tex. App. LEXIS 6502 (Tex. App.—
there is a conflict, the other law applies. Tex. Dallas June 20, 2016, pet. denied). After the
Est. Code Ann. § 751.007. principal’s death, Mitchell, as executor, moved
for partial summary judgment to cancel the deed
The remedies under the new power attorney based on the revocation document, and the trial
statute are not exclusive and other rights and court granted that relief. Wise appealed, arguing
remedies under other laws still exist. Tex. Est. in part that Mitchell did not have the authority to
Code Ann. § 751.006. revoke the deed and that her revocation was not
effective because she had not filed her power of

attorney document in the public records before revoke the deed and affirmed the trial court’s
the revocation document was filed. judgment for Mitchell.
The court of appeals first addressed the filing 2. Limitations on General

requirement. The statute that was in effect at the Authority
time required that for a real estate transaction, a
durable power of attorney form had to be filed in The Act provides certain limitations on a general
the office of the county clerk of the county in grant of authority:
which the property was located. The court of
appeals held that this did not require a particular (b) An agent may take the
sequence, and that Mitchell complied with this following actions on the
requirement by filing her form at the same time principal’s behalf or with
as the revocation document. respect to the principal’s
property only if the durable
The court of appeals then addressed Mitchell’s power of attorney designating
authority to execute the revocation document. the agent expressly grants the
The court held that the power of attorney agent the authority and the
document was governed by former Texas exercise of the authority is not
Probate Code sections 481 through 489, which otherwise prohibited by another
allowed for a non-statutory durable power of agreement or instrument to
attorney form. The court held that the language which the authority or property
of a power of attorney determines the extent of is subject: (1) create, amend,
the authority conveyed to the agent, and that it revoke, or terminate an inter
would construe a power of attorney as a whole vivos trust; (2) make a gift; (3)
in order to ascertain the parties’ intentions and create or change rights of
rights. The court held that the authority granted survivorship; (4) create or
by a power of attorney is strictly construed, so as change a beneficiary
to exclude the exercise of any power that is not designation; or (5) delegate
warranted either by the actual terms used, or as a authority granted under the
necessary means of executing the authority with power of attorney.
effect.
Id. at § 751.031(b). Moreover, the Act provides:
Here, the power of attorney document
authorized Mitchell to “perform any and all acts (c) Notwithstanding a grant of
in my stead and to do and perform all such other authority to perform an act
matters as may be necessary and expedient for described by Subsection (b),
the purpose of carrying out the objects above unless the durable power of
mentioned.” The decedent placed no restrictions attorney otherwise provides, an
on the acts that Mitchell could take as her agent. agent who is not an ancestor,
The court noted that “Where an instrument is spouse, or descendant of the
free from qualifying features either on its face or principal may not exercise
from the evidence, the agent has unlimited authority under the power of
power to act in complete substitution for any act attorney to create in the agent,
which the principal might himself do if present or in an individual to whom the
and acting.” Finally, because the deed was agent owes a legal obligation of
testamentary in nature and vested no interest in support, an interest in the
Wise prior to the decedent’s death, the Deed was principal’s property, whether by
subject to revocation by Mitchell acting as the gift, right of survivorship,
decedent’s agent under the power of attorney. beneficiary designation,
The court held that Mitchell had the power to disclaimer, or otherwise.

Id. at § 751.031(c). may make a gift of the
principal’s property only as the
Regarding gifting powers, the Act provides: agent determines is consistent
with the principal’s best interest
(b) Unless the durable power of based on all relevant factors,
attorney otherwise provides, a including the factors listed in
grant of authority to make a gift Section 751.122 and the
is subject to the limitations principal’s personal history of
prescribed by this section. making or joining in making
gifts.
(c) Language in a durable power
of attorney granting general Id. at § 751.032.
authority with respect to gifts
authorizes the agent to only: (1) 3. Statutory DPOA Form
make outright to, or for the
benefit of, a person a gift of any The Act has a statutory form for a durable power
of the principal’s property, of attorney document. Id. at § 752.051-.052. A
including by the exercise of a statutory durable power of attorney is legally
presently exercisable general sufficient if: (1) the wording of the form
power of appointment held by complies substantially with the wording of the
the principal, in an amount per form prescribed by Section 752.051; (2) the
donee not to exceed: (A) the form is properly completed; and (3) the
annual dollar limits of the signature of the principal is acknowledged. . Id.
federal gift tax exclusion under at § 752.004. This statutory for is not exclusive,
Section 2503(b), Internal and other forms may be used. Id. at § 752.003.
Revenue Code of 1986,
regardless of whether the 4. Construction of DPOA In
federal gift tax exclusion applies General
to the gift; or (B) if the
principal’s spouse agrees to Regarding the construction of a durable power
consent to a split gift as of attorney document, the Act provides:
provided by Section 2513,
Internal Revenue Code of 1986, By executing a statutory durable
twice the annual federal gift tax power of attorney that confers
exclusion limit; and (2) consent, authority with respect to any
as provided by Section 2513, class of transactions, the
Internal Revenue Code of 1986, principal empowers the attorney
to the splitting of a gift made by in fact or agent for that class of
the principal’s spouse in an transactions to: (1) demand,
amount per donee not to exceed receive, and obtain by litigation,
the aggregate annual federal gift action, or otherwise any money
tax exclusions for both spouses. or other thing of value to which
the principal is, may become, or
(d) An agent may make a gift of may claim to be entitled; (2)
the principal’s property only as conserve, invest, disburse, or
the agent determines is use any money or other thing of
consistent with the principal’s value received on behalf of the
objectives if the agent actually principal for the purposes
knows those objectives. If the intended; (3) contract in any
agent does not know the manner with any person, on
principal’s objectives, the agent terms agreeable to the attorney

in fact or agent, to accomplish a 5. General Power For Real Estate
purpose of a transaction and Transactions
perform, rescind, reform,
release, or modify that contract Regarding real estate transactions, the Act
or another contract made by or provides:
on behalf of the principal; (4)
execute, acknowledge, seal, and (a) The language conferring
deliver a deed, revocation, authority with respect to real
mortgage, lease, notice, check, property transactions in a
release, or other instrument the statutory durable power of
attorney in fact or agent attorney empowers the agent,
considers desirable to without further reference to a
accomplish a purpose of a specific description of the real
transaction; (5) with respect to a property, to:
claim existing in favor of or
against the principal: (A) (1) accept as a gift or as security
prosecute, defend, submit to for a loan or reject, demand,
arbitration, settle, and propose buy, lease, receive, or otherwise
or accept a compromise; or (B) acquire an interest in real
intervene in an action or property or a right incident to
litigation relating to the claim; real property;
(6) seek on the principal’s
behalf the assistance of a court (2) sell, exchange, convey with
to carry out an act authorized by or without covenants, quitclaim,
the power of attorney; (7) release, surrender, mortgage,
engage, compensate, and encumber, partition or consent
discharge an attorney, to partitioning, subdivide, apply
accountant, expert witness, or for zoning, rezoning, or other
other assistant; (8) keep governmental permits, plat or
appropriate records of each consent to platting, develop,
transaction, including an grant options concerning, lease
accounting of receipts and or sublet, or otherwise dispose
disbursements; (9) prepare, of an estate or interest in real
execute, and file a record, property or a right incident to
report, or other document the real property;
attorney in fact or agent
considers necessary or desirable (3) release, assign, satisfy, and
to safeguard or promote the enforce by litigation, action, or
principal’s interest under a otherwise a mortgage, deed of
statute or governmental trust, encumbrance, lien, or
regulation; (10) reimburse the other claim to real property that
attorney in fact or agent for an exists or is claimed to exist;
expenditure made in exercising
the powers granted by the (4) perform any act of
durable power of attorney; and management or of conservation
(11) in general, perform any with respect to an interest in real
other lawful act that the property, or a right incident to
principal may perform with real property, owned or claimed
respect to the transaction. to be owned by the principal,
including the authority to: (A)
Id. at § 752.101. insure against a casualty,

liability, or loss; (B) obtain or an interest to public use, with or
regain possession or protect the without consideration;
interest or right by litigation,
action, or otherwise; (C) pay, (9) enter into mineral
compromise, or contest taxes or transactions, including: (A)
assessments or apply for and negotiating and making oil, gas,
receive refunds in connection and other mineral leases
with the taxes or assessments; covering any land, mineral, or
(D) purchase supplies, hire royalty interest in which the
assistance or labor, or make principal has or claims to have
repairs or alterations to the real an interest; (B) pooling and
property; and (E) manage and unitizing all or part of the
supervise an interest in real principal’s land, mineral
property, including the mineral leasehold, mineral, royalty, or
estate; other interest with land, mineral
leasehold, mineral, royalty, or
(5) use, develop, alter, replace, other interest of one or more
remove, erect, or install persons for the purpose of
structures or other developing and producing oil,
improvements on real property gas, or other minerals, and
in which the principal has or making leases or assignments
claims to have an estate, granting the right to pool and
interest, or right; unitize; (C) entering into
contracts and agreements
(6) participate in a concerning the installation and
reorganization with respect to operation of plants or other
real property or a legal entity facilities for the cycling,
that owns an interest in or right repressuring, processing, or
incident to real property, receive other treating or handling of oil,
and hold shares of stock or gas, or other minerals; (D)
obligations received in a plan or conducting or contracting for
reorganization, and act with the conducting of seismic
respect to the shares or evaluation operations; (E)
obligations, including: (A) drilling or contracting for the
selling or otherwise disposing of drilling of wells for oil, gas, or
the shares or obligations; (B) other minerals; (F) contracting
exercising or selling an option, for and making “dry hole” and
conversion, or similar right with “bottom hole” contributions of
respect to the shares or cash, leasehold interests, or
obligations; and (C) voting the other interests toward the
shares or obligations in person drilling of wells; (G) using or
or by proxy; contracting for the use of any
method of secondary or tertiary
(7) change the form of title of an recovery of any mineral,
interest in or right incident to including the injection of water,
real property; gas, air, or other substances; (H)
purchasing oil, gas, or other
(8) dedicate easements or other mineral leases, leasehold
real property in which the interests, or other interests for
principal has or claims to have any type of consideration,
including farmout agreements

requiring the drilling or transporting, or marketing
reworking of wells or minerals; and
participation in the drilling or
reworking of wells; (I) entering (10) designate the property that
into farmout agreements constitutes the principal’s
committing the principal to homestead.
assign oil, gas, or other mineral
leases or interests in (b) The power to mortgage and
consideration for the drilling of encumber real property
wells or other oil, gas, or provided by this section
mineral operations; (J) includes the power to execute
negotiating the transfer of and documents necessary to create a
transferring oil, gas, or other lien against the principal’s
mineral leases or interests for homestead as provided by
any consideration, such as Section 50, Article XVI, Texas
retained overriding royalty Constitution, and to consent to
interests of any nature, drilling the creation of a lien against
or reworking commitments, or property owned by the
production interests; (K) principal’s spouse in which the
executing and entering into principal has a homestead
contracts, conveyances, and interest.
other agreements or transfers
considered necessary or Id. at § 752.102.
desirable to carry out the powers
granted in this section, including 6. General Power Over Tangible
entering into and executing Personal Property
division orders, oil, gas, or other
mineral sales contracts, Regarding tangible personal property, the Act
exploration agreements, provides:
processing agreements, and
other contracts relating to the The language conferring general
processing, handling, treating, authority with respect to
transporting, and marketing of tangible personal property
oil, gas, or other mineral transactions in a statutory
production from or accruing to durable power of attorney
the principal and receiving and empowers the attorney in fact or
receipting for the proceeds of agent to:
those contracts, conveyances,
and other agreements and (1) accept tangible personal
transfers on behalf of the property or an interest in
principal; and (L) taking an tangible personal property as a
action described by Paragraph gift or as security for a loan or
(K) regardless of whether the reject, demand, buy, receive, or
action is, at the time the action otherwise acquire ownership or
is taken or subsequently, possession of tangible personal
recognized or considered as a property or an interest in
common or proper practice by tangible personal property;
those engaged in the business of
prospecting for, developing, (2) sell, exchange, convey with
producing, processing, or without covenants, release,
surrender, mortgage, encumber,

pledge, create a security interest The language conferring
in, pawn, grant options authority with respect to stock
concerning, lease or sublet to and bond transactions in a
others, or otherwise dispose of statutory durable power of
tangible personal property or an attorney empowers the attorney
interest in tangible personal in fact or agent to:
property;
(1) buy, sell, and exchange: (A)
(3) release, assign, satisfy, or stocks; (B) bonds; (C) mutual
enforce by litigation, action, or funds; and (D) all other types of
otherwise a mortgage, security securities and financial
interest, encumbrance, lien, or instruments other than
other claim on behalf of the commodity futures contracts
principal, with respect to and call and put options on
tangible personal property or an stocks and stock indexes;
interest in tangible personal
property; and (2) receive certificates and other
evidences of ownership with
(4) perform an act of respect to securities;
management or conservation
with respect to tangible personal (3) exercise voting rights with
property or an interest in respect to securities in person or
tangible personal property on by proxy;
behalf of the principal,
including: (A) insuring the (4) enter into voting trusts; and
property or interest against
casualty, liability, or loss; (B) (5) consent to limitations on the
obtaining or regaining right to vote.
possession or protecting the
property or interest by litigation, Id. at § 752.104.
action, or otherwise; (C) paying,
compromising, or contesting Regarding commodity and option transactions,
taxes or assessments or applying the Act provides:
for and receiving refunds in
connection with taxes or The language conferring
assessments; (D) moving the authority with respect to
property; (E) storing the commodity and option
property for hire or on a transactions in a statutory
gratuitous bailment; and (F) durable power of attorney
using, altering, and making empowers the attorney in fact or
repairs or alterations to the agent to:
property.
(1) buy, sell, exchange, assign,
Id. at § 752.103. settle, and exercise commodity
futures contracts and call and
7. General Power Over Stock and put options on stocks and stock
Bond and Commodity and indexes traded on a regulated
Option Transactions options exchange; and
Regarding stock and bond transactions, the Act

provides:

(2) establish, continue, modify, (6) receive bank statements,
or terminate option accounts vouchers, notices, or similar
with a broker. documents from a financial
institution and act with respect
Id. at § 752.105. to those documents;
8. General Power Over Banking (7) enter a safe deposit box or

and Other Financial Institution vault and withdraw from or add
Transactions to its contents;
Regarding banking and other financial (8) borrow money at an interest

institution transactions, the Act provides: rate agreeable to the attorney in
fact or agent and pledge as
The language conferring security the principal’s property
authority with respect to as necessary to borrow, pay,
banking and other financial renew, or extend the time of
institution transactions in a payment of a debt of the
statutory durable power of principal;
attorney empowers the attorney
in fact or agent to: (9) make, assign, draw, endorse,
discount, guarantee, and
(1) continue, modify, or negotiate promissory notes, bills
terminate an account or other of exchange, checks, drafts, or
banking arrangement made by other negotiable or
or on behalf of the principal; nonnegotiable paper of the
principal, or payable to the
(2) establish, modify, or principal or the principal’s order
terminate an account or other to receive the cash or other
banking arrangement with a proceeds of those transactions,
bank, trust company, savings to accept a draft drawn by a
and loan association, credit person on the principal, and to
union, thrift company, pay the principal when due;
brokerage firm, or other
financial institution selected by (10) receive for the principal
the attorney in fact or agent; and act on a sight draft,
warehouse receipt, or other
(3) rent a safe deposit box or negotiable or nonnegotiable
space in a vault; instrument;
(4) contract to procure other (11) apply for and receive letters
services available from a of credit, credit cards, and
financial institution as the traveler’s checks from a
attorney in fact or agent financial institution and give an
considers desirable; indemnity or other agreement in
connection with letters of credit;
(5) withdraw by check, order, or and
otherwise money or property of
the principal deposited with or (12) consent to an extension of
left in the custody of a financial the time of payment with
institution; respect to commercial paper or a

financial transaction with a other similar instrument and
financial institution. defend, submit to arbitration,
settle, or compromise a legal
Id. at § 752.106. proceeding to which the
principal is a party because of a
9. General Power Over Business bond, share, or similar
Operation Transactions instrument;
Regarding business operation transactions, the (4) with respect to a business

Act provides: owned solely by the principal:
(A) continue, modify,
The language conferring renegotiate, extend, and
authority with respect to terminate a contract made
business operating transactions before execution of the power of
in a statutory durable power of attorney with an individual,
attorney empowers the attorney legal entity, firm, association, or
in fact or agent to: corporation by or on behalf of
the principal with respect to the
(1) operate, buy, sell, enlarge, business; (B) determine: (i) the
reduce, or terminate a business location of the business’s
interest; operation; (ii) the nature and
extent of the business; (iii) the
(2) do the following, to the methods of manufacturing,
extent that an attorney in fact or selling, merchandising,
agent is permitted by law to act financing, accounting, and
for a principal and subject to the advertising employed in the
terms of a partnership business’s operation; (iv) the
agreement: (A) perform a duty, amount and types of insurance
discharge a liability, or exercise carried; and (v) the method of
a right, power, privilege, or engaging, compensating, and
option that the principal has, dealing with the business’s
may have, or claims to have accountants, attorneys, and
under the partnership other agents and employees; (C)
agreement, whether or not the change the name or form of
principal is a general or limited organization under which the
partner; (B) enforce the terms of business is operated and enter
the partnership agreement by into a partnership agreement
litigation, action, or otherwise; with other persons or organize a
and (C) defend, submit to corporation to take over all or
arbitration, settle, or part of the operation of the
compromise litigation or an business; and (D) demand and
action to which the principal is a receive money due or claimed
party because of membership in by the principal or on the
the partnership; principal’s behalf in the
operation of the business and
(3) exercise in person or by control and disburse the money
proxy, or enforce by litigation, in the operation of the business;
action, or otherwise, a right,
power, privilege, or option the (5) put additional capital into a
principal has or claims to have business in which the principal
as the holder of a bond, share, or has an interest;

(6) join in a plan of (a) The language conferring
reorganization, consolidation, or authority with respect to
merger of the business; insurance and annuity
transactions in a statutory
(7) sell or liquidate a business or durable power of attorney
part of the business at the time empowers the attorney in fact or
and on the terms that the agent to:
attorney in fact or agent
considers desirable; (1) continue, pay the premium
or assessment on, modify,
(8) establish the value of a rescind, release, or terminate a
business under a buy-out contract procured by or on
agreement to which the behalf of the principal that
principal is a party; insures or provides an annuity to
either the principal or another
(9) do the following: (A) person, whether or not the
prepare, sign, file, and deliver principal is a beneficiary under
reports, compilations of the contract;
information, returns, or other
papers with respect to a (2) procure new, different, or
business: (i) that are required by additional insurance contracts
a governmental agency, and annuities for the principal or
department, or instrumentality; the principal’s spouse, children,
or (ii) that the attorney in fact or and other dependents and select
agent considers desirable; and the amount, type of insurance or
(B) make related payments; and annuity, and method of
payment;
(10) pay, compromise, or
contest taxes or assessments and (3) pay the premium or
perform any other act that the assessment on, or modify,
attorney in fact or agent rescind, release, or terminate, an
considers desirable to protect insurance contract or annuity
the principal from illegal or procured by the attorney in fact
unnecessary taxation, fines, or agent;
penalties, or assessments with
respect to a business, including (4) designate the beneficiary of
attempts to recover, in any the insurance contract, except as
manner permitted by law, provided by Subsection (b);
money paid before or after the
execution of the power of (5) apply for and receive a loan
attorney. on the security of the insurance
contract or annuity;
Id. at § 752.107.
(6) surrender and receive the
10. General Power of Insurance and cash surrender value;
Annuity Transactions
(7) exercise an election;
Regarding insurance and annuity transactions,
the Act provides: (8) change the manner of paying
premiums;

(9) change or convert the type 11. General Power Over Estate,
of insurance contract or annuity Trust, and Other Beneficiary
with respect to which the Transactions
principal has or claims to have a
power described by this section; Regarding estate, trust, and other beneficiary
transactions, the Act provides:
(10) change the beneficiary of
an insurance contract or annuity, The language conferring
except that the attorney in fact authority with respect to estate,
or agent may be designated a trust, and other beneficiary
beneficiary only to the extent transactions in a statutory
authorized by Subsection (b); durable power of attorney
empowers the agent to act for
(11) apply for and procure the principal in all matters that
government aid to guarantee or affect a trust, probate estate,
pay premiums of an insurance guardianship, conservatorship,
contract on the life of the life estate, escrow,
principal; custodianship, or other fund
from which the principal is, may
(12) collect, sell, assign, borrow become, or claims to be entitled,
on, or pledge the principal’s as a beneficiary, to a share or
interest in an insurance contract payment, including to:
or annuity; and
(1) accept, reject, disclaim,
(13) pay from proceeds or receive, receipt for, sell, assign,
otherwise, compromise or release, pledge, exchange, or
contest, or apply for refunds in consent to a reduction in or
connection with a tax or modification of a share in or
assessment imposed by a taxing payment from the fund;
authority with respect to an
insurance contract or annuity or (2) demand or obtain by
the proceeds of the contract or litigation, action, or otherwise
annuity or liability accruing money or any other thing of
because of the tax or value to which the principal is,
assessment. may become, or claims to be
entitled because of the fund;
(b) Unless the principal has
granted the authority to create or (3) initiate, participate in, or
change a beneficiary oppose a legal or judicial
designation expressly as proceeding to: (A) ascertain the
required by Section meaning, validity, or effect of a
751.031(b)(4), an agent may be deed, will, declaration of trust,
named a beneficiary of an or other instrument or
insurance contract or an transaction affecting the interest
extension, renewal, or substitute of the principal; or (B) remove,
for the contract only to the substitute, or surcharge a
extent the agent was named as a fiduciary;
beneficiary by the principal.
(4) conserve, invest, disburse, or
Id. at § 752.108. use anything received for an
authorized purpose; and

(5) transfer all or part of the satisfy a judgment, order, or
principal’s interest in real decree; and (B) perform any
property, stocks, bonds, lawful act the principal could
accounts with financial perform, including: (i)
institutions, insurance, and other acceptance of tender; (ii) offer
property to the trustee of a of judgment; (iii) admission of
revocable trust created by the facts; (iv) submission of a
principal as settlor. controversy on an agreed
statement of facts; (v) consent to
Id. at § 752.109. examination before trial; and
(vi) binding of the principal in
12. General Power Over Claims and litigation;
Litigation
(4) submit to arbitration, settle,
Regarding claims and litigation, the Act and propose or accept a
provides: compromise with respect to a
claim or litigation;
The language conferring general
authority with respect to claims (5) waive the issuance and
and litigation in a statutory service of process on the
durable power of attorney principal, accept service of
empowers the attorney in fact or process, appear for the
agent to: principal, designate persons on
whom process directed to the
(1) assert and prosecute before a principal may be served,
court or administrative agency a execute and file or deliver
claim, a claim for relief, a stipulations on the principal’s
counterclaim, or an offset, or behalf, verify pleadings, seek
defend against an individual, a appellate review, procure and
legal entity, or a government, give surety and indemnity
including an action to: (A) bonds, contract and pay for the
recover property or other thing preparation and printing of
of value; (B) recover damages records and briefs, or receive
sustained by the principal; (C) and execute and file or deliver a
eliminate or modify tax liability; consent, waiver, release,
or (D) seek an injunction, confession of judgment,
specific performance, or other satisfaction of judgment, notice,
relief; agreement, or other instrument
in connection with the
(2) bring an action to determine prosecution, settlement, or
an adverse claim, intervene in defense of a claim or litigation;
an action or litigation, and act as
an amicus curiae; (6) act for the principal
regarding voluntary or
(3) in connection with an action involuntary bankruptcy or
or litigation: (A) procure an insolvency proceedings
attachment, garnishment, libel, concerning: (A) the principal; or
order of arrest, or other (B) another person, with respect
preliminary, provisional, or to a reorganization proceeding
intermediate relief and use an or a receivership or application
available procedure to effect or for the appointment of a

receiver or trustee that affects appropriate education, and other
the principal’s interest in living costs;
property or other thing of value;
and (3) pay necessary medical,
dental, and surgical care,
(7) pay a judgment against the hospitalization, and custodial
principal or a settlement made care for the individuals
in connection with a claim or described by Subdivision (1);
litigation and receive and
conserve money or other thing (4) continue any provision made
of value paid in settlement of or by the principal for the
as proceeds of a claim or individuals described by
litigation. Subdivision (1) for automobiles
or other means of transportation,
Id. at § 752.110. including registering, licensing,
insuring, and replacing the
13. General Power Over Personal automobiles or other means of
and Family Maintenance transportation;
Regarding personal and family maintenance, the (5) maintain or open charge
Act provides: accounts for the convenience of
the individuals described by
The language conferring Subdivision (1) and open new
authority with respect to accounts the agent considers
personal and family desirable to accomplish a lawful
maintenance in a statutory purpose;
durable power of attorney
empowers the agent to: (6) continue: (A) payments
incidental to the membership or
(1) perform the acts necessary to affiliation of the principal in a
maintain the customary standard church, club, society, order, or
of living of the principal, the other organization; or (B)
principal’s spouse and children, contributions to those
and other individuals organizations;
customarily or legally entitled to
be supported by the principal, (7) perform all acts necessary in
including: (A) providing living relation to the principal’s mail,
quarters by purchase, lease, or including: (A) receiving,
other contract; or (B) paying the signing for, opening, reading,
operating costs, including and responding to any mail
interest, amortization payments, addressed to the principal,
repairs, and taxes on premises whether through the United
owned by the principal and States Postal Service or a
occupied by those individuals; private mail service; (B)
forwarding the principal’s mail
(2) provide for the individuals to any address; and (C)
described by Subdivision (1): representing the principal before
(A) normal domestic help; (B) the United States Postal Service
usual vacations and travel in all matters relating to mail
expenses; and (C) money for service; and
shelter, clothing, food,

(8) subject to the needs of the (3) prepare, file, and prosecute a
individuals described by claim of the principal for a
Subdivision (1), provide for the benefit or assistance, financial
reasonable care of the or otherwise, to which the
principal’s pets. principal claims to be entitled
under a statute or governmental
Id. at § 752.111. regulation;
14. Power Over Benefits From (4) prosecute, defend, submit to

Governmental Programs or arbitration, settle, and propose
Civil or Military Service or accept a compromise with
respect to any benefits the
Regarding benefits from governmental programs principal may be entitled to
or civil or military service, the Act provides: receive; and
The language conferring (5) receive the financial

authority with respect to proceeds of a claim of the type
benefits from social security, described by this section and
Medicare, Medicaid, or other conserve, invest, disburse, or
governmental programs or civil use anything received for a
or military service in a statutory lawful purpose.
durable power of attorney
empowers the attorney in fact or Id. at § 752.112.
agent to:
15. Power Over Retirement Plan
(1) execute a voucher in the Transactions
principal’s name for an
allowance or reimbursement Regarding retirement plan transactions, the Act
payable by the United States, a provides:
foreign government, or a state
or subdivision of a state to the (a) In this section, “retirement
principal, including an plan” means:
allowance or reimbursement for:
(A) transportation of the (1) an employee pension benefit
individuals described by Section plan as defined by Section 3,
752.111(1); and (B) shipment of Employee Retirement Income
the household effects of those Security Act of 1974 (29 U.S.C.
individuals; Section 1002), without regard to
the provisions of Section (2)(B)
(2) take possession and order of that section;
the removal and shipment of the
principal’s property from a post, (2) a plan that does not meet the
warehouse, depot, dock, or other definition of an employee
governmental or private place of benefit plan under the Employee
storage or safekeeping and Retirement Income Security Act
execute and deliver a release, of 1974 (29 U.S.C. Section
voucher, receipt, bill of lading, 1001 et seq.) because the plan
shipping ticket, certificate, or does not cover common law
other instrument for that employees;
purpose;

(3) a plan that is similar to an (6) make rollovers of plan
employee benefit plan under the benefits into other retirement
Employee Retirement Income plans;
Security Act of 1974 (29 U.S.C.
Section 1001 et seq.), regardless (7) borrow from, sell assets to,
of whether the plan is covered and purchase assets from
by Title 1 of that Act, including retirement plans if authorized by
a plan that provides death the plan;
benefits to the beneficiary of
employees; and (8) waive the principal’s right to
be a beneficiary of a joint or
(4) an individual retirement survivor annuity if the principal
account or annuity, a self- is not the participant in the
employed pension plan, or a retirement plan;
similar plan or account.
(9) receive, endorse, and cash
(b) The language conferring payments from a retirement
authority with respect to plan;
retirement plan transactions in a
statutory durable power of (10) waive the principal’s right
attorney empowers the agent to to receive all or a portion of
perform any lawful act the benefits payable by a retirement
principal may perform with plan; and
respect to a transaction relating
to a retirement plan, including (11) request and receive
to: information relating to the
principal from retirement plan
(1) apply for service or records.
disability retirement benefits;
(c) Unless the principal has
(2) select payment options granted the authority to create or
under any retirement plan in change a beneficiary
which the principal participates, designation expressly as
including plans for self- required by Section
employed individuals; 751.031(b)(4), an agent may be
named a beneficiary under a
(3) designate or change the retirement plan only to the
designation of a beneficiary or extent the agent was named a
benefits payable by a retirement beneficiary by the principal
plan, except as provided by under the retirement plan, or in
Subsection (c); the case of a rollover or trustee-
to-trustee transfer, the
(4) make voluntary predecessor retirement plan.
contributions to retirement plans
if authorized by the plan; Id. at § 752.113.
(5) exercise the investment 16. Power Over Tax Matters

powers available under any self-
directed retirement plan; Regarding tax matter, the Act provides:

The language conferring 17. Power to Create or Change
authority with respect to tax Beneficiary Designations
matters in a statutory durable
power of attorney empowers the The Act provides that a durable power of
attorney in fact or agent to: attorney agent can, under certain circumstances,
change or create a beneficiary designation on
(1) prepare, sign, and file: (A) certain accounts or insurance policies:
federal, state, local, and foreign
income, gift, payroll, Federal (a) Unless the durable power of
Insurance Contributions Act (26 attorney otherwise provides, and
U.S.C. Chapter 21), and other except as provided by Section
tax returns; (B) claims for 751.031(c), authority granted to
refunds; (C) requests for an agent under Section
extensions of time; (D) petitions 751.031(b)(4) empowers the
regarding tax matters; and (E) agent to: (1) create or change a
any other tax-related beneficiary designation under an
documents, including: (i) account, contract, or another
receipts; (ii) offers; (iii) arrangement that authorizes the
waivers; (iv) consents, including principal to designate a
consents and agreements under beneficiary, including an
Section 2032A, Internal insurance or annuity contract, a
Revenue Code of 1986 (26 qualified or nonqualified
U.S.C. Section 2032A); (v) retirement plan, including a
closing agreements; and (vi) any retirement plan as defined by
power of attorney form required Section 752.113, an
by the Internal Revenue Service employment agreement,
or other taxing authority with including a deferred
respect to a tax year on which compensation agreement, and a
the statute of limitations has not residency agreement; (2) enter
run and 25 tax years following into or change a P.O.D. account
that tax year; or trust account under Chapter
113; or (3) create or change a
(2) pay taxes due, collect nontestamentary payment or
refunds, post bonds, receive transfer under Chapter 111.
confidential information, and
contest deficiencies determined (b) If an agent is granted
by the Internal Revenue Service authority under Section
or other taxing authority; 751.031(b)(4) and the durable
power of attorney grants the
(3) exercise any election authority to the agent described
available to the principal under in Section 752.108 or 752.113,
federal, state, local, or foreign then, unless the power of
tax law; and attorney otherwise provides, the
authority of the agent to
(4) act for the principal in all tax designate the agent as a
matters, for all periods, before beneficiary is not subject to the
the Internal Revenue Service limitations prescribed by
and any other taxing authority. Sections 752.108(b) and
752.113(c).
Id. at § 752.114.

(c) If an agent is not granted for maintenance; (3)
authority under Section minimization of taxes, including
751.031(b)(4) but the durable income, estate, inheritance,
power of attorney grants the generation-skipping transfer,
authority to the agent described and gift taxes; and (4) eligibility
in Section 752.108 or 752.113, for a benefit, a program, or
then, unless the power of assistance under a statute or
attorney otherwise provides and regulation.
notwithstanding Section
751.031, the agent’s authority to Id. at § 751.122.
designate the agent as a
beneficiary is subject to the Finally, a power of attorney agent is an agent
limitations prescribed by and owes the fiduciary duties recognized by
Sections 752.108(b) and common law for agents generally. An agency
752.113(c). relationship can be formed by oral agreement
between the parties or simply by the parties’
Id. at § 751.033. This is described in more detail conduct. Community Health Systems
below. Professional Services Corporation v. Hansen,
525 S.W.3d 671 (Tex. 2017). An agency
K. Agent’s Duties relationship creates a fiduciary relationship as a
matter of law. Crim Truck & Tractor Co. v.
An agent is a fiduciary when he or she acts Navistar Intern. Transp. Corp., 823 S.W.2d 591,
under the power of attorney document. “A 52 A.L.R.5th 919 (Tex. 1992). Factors which
person who accepts appointment as an agent must be taken into consideration when
under a durable power of attorney as provided determining the scope of an agent’s fiduciary
by Section 751.022 is a fiduciary as to the duty include not only the nature and purpose of
principal only when acting as an agent under the the relationship, but also agreements between
power of attorney and has a duty to inform and the agent and principal. National Plan Adm’rs,
to account for actions taken under the power of Inc. v. National Health Ins. Co., 235 S.W.3d 695
attorney.” Id. at § 751.101. An agent has a duty (Tex. 2007); Man Industries (India), Ltd. v.
to timely inform the principal, maintain records, Midcontinent Exp. Pipeline, LLC, 407 S.W.3d
and perform an accounting when requested. Id. 342 (Tex. App.—Houston [14th Dist.] 2013, no
at § 751.102-104. The agent also has a duty to pet.). The agreement to act on behalf of the
inform the principal of breaches of fiduciary principal causes the agent to be a fiduciary, that
duties by other agents. Id. at § 751.121. is, a person having a duty, created by the agent’s
undertaking, to act primarily for the benefit of
Importantly, an agent has the duty to preserve a another in matters connected with such
principal’s estate plan. The Act provides: undertaking. Stoneeagle Services, Inc. v. Davis,
2013 WL 12143946 (N.D. Tex. 2013). The
An agent shall preserve to the nature of the fiduciary duty owed by an agent is
extent reasonably possible the a high duty of good faith, fair dealing, honest
principal’s estate plan to the performance, and strict accountability. Salas v.
extent the agent has actual Total Air Services, LLC, 550 S.W.3d 683 (Tex.
knowledge of the plan if App.—El Paso 2018, no pet.); Daniel v. Falcon
preserving the plan is consistent Interest Realty Corp., 190 S.W.3d 177 (Tex.
with the principal’s best interest App.—Houston [1st Dist.] 2005, no pet.). Under
based on all relevant factors, Texas law, an agent has a general duty to
including: (1) the value and disclose material facts to such individual’s
nature of the principal’s principal. Patton v. Archer, 590 F.2d 1319 (5th
property; (2) the principal’s Cir. 1979). Specifically, an agent has the duty to
foreseeable obligations and need impart to its principal every material fact

relating to transactions within the scope of the except as provided by
agency on becoming aware of those facts during Subsection (c); or (B) if
the course of the transaction. Allison v. applicable, request an English
Harrison, 137 Tex. 582, 156 S.W.2d 137 translation under Section
(Comm’n App. 1941). Under the principles that 751.205 not later than the fifth
relate to fraud and deceit generally, an agent’s business day after the date the
conduct that constitutes a fraud on its principal power of attorney is presented,
renders the agent liable in damages to the except as provided by
principal. Tyler Building & Loan Ass’n v. Baird Subsection (c).
& Scales, 106 Tex. 554, 171 S.W. 1122 (1914).
Tex. Est. Code Ann. § 751.201(a).
A fiduciary may be held accountable for
breaching its duty by acting negligently. ERI A person who requests: “(1) an agent’s
Consulting Engineers, Inc. v. Swinnea, 318 certification must accept the durable power of
S.W.3d 867 (Tex. 2010). In determining an attorney not later than the seventh business day
agent’s liability for negligence, courts need not after the date the person receives the requested
consider whether the agent acted in good faith; certification; and (2) an opinion of counsel must
instead, courts are to inquire as to whether the accept the durable power of attorney not later
agent complied with the legal standard of than the seventh business day after the date the
conduct required under the circumstances person receives the requested opinion.” Id. at §
presented. Highway Ins. Underwriters v. Lufkin- 751.201(b).
Beaumont Motor Coaches, 215 S.W.2d 904
(Tex. Civ. App.—Beaumont 1948, writ refused The statute does provide that the parties can
n.r.e.). agree to extend the periods provided above. Id.
at § 751.201(c). Therefore, the principal or agent
L. Persons Now Generally Required To presenting a durable power of attorney for
Accept Power Of Attorney Documents acceptance and the person may agree to extend a
(With Limited Exceptions) time period prescribed above. No format for the
agreement or time period during which the
Historically, in Texas, persons were not required agreement may be entered into is specified, but
to accept power of attorney documents. They it is prudent that the agreement be in writing,
could reject them for any reason and did not dated, and signed by both parties before the end
have any obligation to explain why they were of the original ten business-day period.
not accepting them. That has now changed.
Section 751.201 of the Texas Estates Code Importantly, a person is not required to accept a
provides: power of attorney if the agent does not provide a
requested certification, opinion of counsel, or
[A] person who is presented English translation. Id. at § 751.201(e).
with and asked to accept a
durable power of attorney by an A durable power of attorney is considered
agent with authority to act under accepted on the first day the person agrees to act
the power of attorney shall: (1) at the agent’s discretion under the power of
accept the power of attorney; or attorney. Tex. Est. Code Ann. § 751.208.
(2) before accepting the power Therefore, persons should implement procedures
of attorney: (A) request an that will avoid an unintentional acceptance of
agent’s certification under the power of attorney before a decision has been
Section 751.203 or an opinion made to accept or reject it.
of counsel under Section
751.204 not later than the 10th
business day after the date the
power of attorney is presented,

M. Timeline Considerations transaction or requested action, the agent may
agree that he or she is not seeking a
The statute does not describe “business days.” determination on acceptance at this time, which
Under the Texas Government Code, in would not start the clock. If he or she does
computing business days, a person should request acceptance, even without a transaction in
exclude the first day and include the last day, mind, the person should take the safest course
and if the last day is a Saturday, Sunday, or legal and start the process for accepting or rejecting
holiday, the person should extend the period to the document.
include the day that is not a Saturday, Sunday, or
legal holiday. Tex. Gov. Code Ann. § 311.014. The author is of the opinion that Section
751.201(a) must mean that a power of attorney
N. When Does The Agent Present The document is offered for acceptance when there is
Power Of Attorney To Start The Clock? a request to consummate a particular transaction
or to take some affirmative action. Granted, that
The event that triggers a person’s time period to section does not limit it to “transactions,” but
accept the power of attorney document is the other provisions clearly contemplate a
presentment of the document and a request to transaction or request for action being associated
accept it by an agent. Tex. Est. Code Ann. § with the request. Section 751.206 provides the
751.201(a). This should normally be a fairly reasons that a person may reject a power of
easy assessment. For example, an agent may attorney document, and many of those reasons
present a power of attorney document and want revolve around facts that actually use the term
to write a check, wire money in or out, deposit “transaction.” Tex. Est. Code Ann. § 751.206(1),
money, obtain a loan, change an account (2), and (3). The statutes discussing an agent’s
agreement, request statements, etc. Each request powers are primarily done in reference to
will be focused on a particular transaction or “transactions.” Id. at §§ 752.102-752.115.
request some action by the person. However,
Section 751.201(a) does not use the term For example, the provision discussing the power
“transaction” or require the request to involve an to conduct banking transactions states:
action by the person; rather it uses a broader
phase: “who is presented with and asked to The language conferring
accept a durable power of attorney by an authority with respect to
agent…” Id. That could encompass an agent banking and other financial
bringing in a power of attorney document before institution transactions in a
a particular transaction or request for action statutory durable power of
occurs. For example, an agent may bring such a attorney empowers the attorney
document in before the principal is incapacitated in fact or agent to:(1) continue,
because they live in another location and want to modify, or terminate an account
simply keep it “on file” in case it is needed in or other banking arrangement
the future. When the agent delivers the power of made by or on behalf of the
attorney document without an immediate principal;
transaction or request of action in mind, does
that start the clock for the person to reject the (2) establish, modify, or
power of attorney document? terminate an account or other
banking arrangement with a
The safest answer at this time is to document the bank, trust company, savings
incident and clarify whether the agent is and loan association, credit
presenting it to the person and requesting that union, thrift company,
the person accept it. The Author has a proposed brokerage firm, or other
in Appendix B a form agreement that could be financial institution selected by
used to clarify whether the agent is “presenting” the attorney in fact or agent;
the power of attorney. If there is no associated

(3) rent a safe deposit box or negotiable or nonnegotiable
space in a vault; instrument;
(4) contract to procure other (11) apply for and receive

services available from a letters of credit, credit cards,
financial institution as the and traveler’s checks from a
attorney in fact or agent financial institution and give an
considers desirable; indemnity or other agreement in
connection with letters of credit;
(5) withdraw by check, order, and
or otherwise money or property
of the principal deposited with (12) consent to an extension of
or left in the custody of a the time of payment with
financial institution; respect to commercial paper or a
financial transaction with a
(6) receive bank statements, financial institution.
vouchers, notices, or similar
documents from a financial Id. at 752.106.
institution and act with respect
to those documents; A statute should be construed as a whole rather
than in its isolated provisions. Helena Chem. Co.
(7) enter a safe deposit box or v. Wilkins, 47 S.W.3d 486, 493 (Tex. 2001). A
vault and withdraw from or add court should not give one provision a meaning
to its contents; that is out of harmony or inconsistent with the
other provisions, although it may be susceptible
(8) borrow money at an interest to such a construction standing alone. City of
rate agreeable to the attorney in Waco v. Kelley, 309 S.W.3d 536, 542 (Tex.
fact or agent and pledge as 2010). Accordingly, a court should construe
security the principal’s property presentment of a power of attorney document to
as necessary to borrow, pay, include an actual transaction or other request for
renew, or extend the time of action. Until that issue is decided, a person
payment of a debt of the should be careful to clarify in writing any issues
principal; concerning presentment with an agent.
(9) make, assign, draw, O. Person Cannot Request Alternative POA

endorse, discount, guarantee, Form And Originals Are Not Required
and negotiate promissory notes,
bills of exchange, checks, drafts, Historically, many institutions have rejected
or other negotiable or power of attorney forms and required agents to
nonnegotiable paper of the have the particular institution’s power of
principal, or payable to the attorney form executed by the principal. This
principal or the principal’s order was very problematic when the principal was
to receive the cash or other incapacitated and not able to execute a new
proceeds of those transactions, form. Accordingly, the new statutory changes
to accept a draft drawn by a now state that a person who is asked to accept a
person on the principal, and to durable power of attorney that meets the
pay the principal when due; statutory requirements set forth above and
includes the appropriate authority for the
(10) receive for the principal transaction cannot request “an additional or
and act on a sight draft, different form of the power of attorney.” Tex.
warehouse receipt, or other Est. Code Ann. § 751.202(1). Therefore, the

person cannot request a power of attorney that is Accordingly, the author suggests that persons
otherwise valid be revised to include additional generally request agent’s certifications for any
language. Id. transaction, including individual check
transactions. Of course, a person may have a
Further, the person may not require that the particular circumstance where it wants to omit
agent file or record the power of attorney the requirement for an additional certification,
document “in the office of a county clerk unless and that may be done where reasonable.
the recording of the instrument is required by
Section 751.151 or another law of this state.” Id. It may be convenient for a person to have a form
certification on hand and to provide a notary
However, pursuant to Section 751.203 of the service for agents wanting to make a transaction.
Texas Estates Code, a person may request that With respect to employees notarizing a
“the agent presenting the power of attorney certification, there is no per se prohibition to an
provide to the person an agent’s certification, employee doing so. In fact, Texas Finance Code
under penalty of perjury, of any factual matter Section 59.003 provides: “[a] notary public is
concerning the principal, agent, or power of not disqualified from taking an acknowledgment
attorney.” Tex. Est. Code Ann. § 751.203. or proof of a written instrument as provided by
Therefore, the Author believes that a person can Section 406.016, Government Code, solely
require the agent to include a requested factual because of the person’s ownership of stock or a
statement in the certificate. Id. participation interest in or employment by a
financial institution that is an interested party to
Further, unless otherwise required by statute or the underlying transaction.” Tex. Fin. Code Ann.
by the durable power of attorney document, a § 59.003.
photocopy or electronically transmitted copy of
an original durable power of attorney document If a dispute ever arises, however, a person
has the same effect as the original instrument should be aware that the fact that the employee
and may be relied on without liability by the notarized the certification may be used as
person who is asked to accept it. Id. at evidence. For that reason, the better practice
751.0023(c). would be for a non-interested third party to
notarize the certification.
P. Agent’s Certification
Q. Physician’s Written Statement
As stated above, the person to whom the power
of attorney is presented may request that the If the power of attorney becomes effective on
agent provide an agent’s certification, under the disability or incapacity of the principal, the
penalty of perjury, of any factual matter person may also request that the certification
concerning the principal, agent, or power of include a written statement from a physician that
attorney. The statute provides a form for the states that the principal is presently disabled or
certification for parties to use. Id. at § incapacitated. Id. at § 751.203.
751.203(b).
Unless otherwise defined in the power of
Section 751.203(c) of the Texas Estates Code attorney document, a person is considered
states: “[a] certification made in compliance disabled or incapacitated for the purposes of the
with this section is conclusive proof of the durable power of attorney if a physician certifies
factual matter that is the subject of the in writing at a date later than the date of the
certification.” Id. at § 751.203(c). Further, “[a] power of attorney document that, based on the
person may rely on, without further investigation physician’s medical examination of the person,
or liability to another person, an agent’s the person is determined to be mentally
certification, opinion of counsel, or English incapable of managing the person’s financial
translation that is provided to the person under affairs. Tex. Est. Code Ann. § 751.00201.
this subchapter.” Id. at § 751.210.

For any springing durable power of attorney In the end, if the principal’s physician will not
document (one that becomes effective upon the provide any written information about the
disability or incapacity of the principal), a principal’s ability to manage their financial
person has the right to request a writing from a affairs, then the person does not have to accept
doctor stating that the principal is disabled or the durable power of attorney and may reject it.
incapacitated. The author would recommend that So, the burden is on the agent to obtain the
a person request that physician’s written medical opinion if they want the person to close
statement for any springing power of attorney the transaction.
document that is presented.
R. Opinion Of Counsel
The request for medical information about a
principal raises HIPAA privacy issues. 45 Before accepting a power of attorney, the person
C.F.R. Section 164.502, which pertains to the may request from the agent an opinion of
general permissible uses and disclosures of counsel regarding any matter of law concerning
protected health information, protects the the power of attorney so long as the person
disclosure of a person’s medical information. provides to the agent the reason for the request
The protected health care information is in a writing or other record. Id. at § 751.204(a).
individually identifiable health information held If timely sought, this opinion will be prepared by
or transmitted by a covered entity (which the principal or agent, at the principal’s expense.
includes most health care providers) in any form Id. at § 751.204(b). However, if the person
or media, whether electronic, paper or oral and requests the opinion later than the tenth business
includes the patient’s past, present, and future day after the date the agent presents the power of
physical or mental health condition. 45 C.F.R. attorney and there has not otherwise been an
Section 164.508 pertains to the uses and agreed-upon extension, the principal or agent
disclosures of protected health information for may, but is not required to, provide the opinion
which an authorization is required. A provider and it will be done at the requestor’s expense. Id.
must obtain the principal’s written authorization at § 751.204(c).
for any use or disclosure of protected health
information that is not for treatment, payment or The Author recommends that when the person is
health care operations, or otherwise permitted or presented with a power of attorney document
required by the privacy rule. All authorizations that is prepared in another state or that does not
must be in plain language, and contain specific meet the statutory form, that the person timely
information regarding the information to be requested an opinion of counsel on whether the
disclosed or used, the person(s) disclosing and power of attorney document is enforceable and
receiving the information, expiration, right to valid. Further, if the person has any doubt
revoke in writing, and other data and terms. A regarding the propriety of the transaction, the
medical power of attorney holder may person should request an attorney’s opinion that
potentially sign a release for this type of the transaction is appropriate and not in breach
information. Tex. Health & Safety Code Ann. § of any duties that the agent owes the principal.
166.157. A medical power of attorney or other
written authorization should specifically state S. English Translation
that medical care information can be shared with
the agent who has been assigned power of The person may request from the agent
attorney. That way, any health care provider presenting the power of attorney document that
reviewing the medical power of attorney can be the agent provide an English translation of the
assured that he or she will not be in breach of power of attorney document if some or all of the
HIPAA privacy rules, and subject to related power of attorney document is not written in
fines, if a principal’s health care information English. Id. at § 751.205(a). If timely requested
needs to be shared with the named (within five days of getting the power of
representative. attorney document), the translation must be
provided by the principal or agent at the

principal’s expense. Id. at § 751.205(b). actual knowledge that the signature of the
However, if, without an extension, the person principal is not genuine may rely on a
requests the translation later than the fifth presumption that the signature is genuine and
business day after the date the power of attorney that the power of attorney was properly
is presented, the principal or agent may, but is executed. Id. at § 751.209(a). Additionally, a
not required to, provide the translation at the person who in good faith accepts a power of
requestor’s expense. Id. If the person asks for an attorney without actual knowledge that the
English translation, then the power of attorney is power of attorney is void, invalid, or terminated,
not considered presented until the date the that the purported agent’s authority is void,
person receives the translation. Id. at § invalid, or terminated, or that the agent is
751.201(d). At that point the person can request exceeding or improperly exercising the agent’s
a certification and/or attorney opinion. authority may rely on the power of attorney as
if: (1) the power of attorney were genuine, valid,
A person should generally request an English and still in effect; (2) the agent’s authority were
translation when presented with a power of genuine, valid, and still in effect; and (3) the
attorney document that is not in English. If agent had not exceeded and had properly
nothing else, this will delay the time periods for exercised the authority. Id. at § 751.209(b).
compliance and/or requesting an agent’s
certificate or opinion of counsel. The durable These provisions provide limited protections to
power of attorney is not considered presented for the person accepting the power of attorney
acceptance until the date the person receives the document. The person is protected if it acts in
translation. In this instance, the author advises good faith and without actual knowledge of a
not requesting an agent’s certification, defect. That simply means that there may be a
physician’s written statement, or the opinion of fact issue regarding “good faith” or “actual
counsel until after receipt of the English knowledge.” The statute also does not state
translation in order to extend the period allowed whose burden it is to prove “good faith” or
to accept or reject the power of attorney. “actual knowledge” or the lack thereof.
The Author has provided a proposed form for a The statutes protect a person receiving a
request for an English translation as Exhibit F. certification, opinion, or translation: “A person
may rely on, without further investigation or
T. Person Accepting Power Of Attorney liability to another person, an agent’s
Has Defenses certification, opinion of counsel, or English
translation that is provided to the person under
The statutes have many different protections for this subchapter.” Tex. Est. Code Ann. § 751.210.
those who are asked to accept a power of So, if the certification has false statements, the
attorney document. person has no duty to investigate those facts and
may rely on the certification without liability to
The statutes protect a person who receives a a third party. For example, if the agent states that
copy of a power of attorney document: “a the principal has never revoked the power of
photocopy or electronically transmitted copy of attorney, but the principal really did so, then a
an original durable power of attorney . . . may be financial institution that conducted a transaction
relied on, without liability, by a person who is with the agent has a defense if the executor of
asked to accept the durable power of attorney to the principal’s estate later sues based on the
the same extent as the original.” Tex. Est. Code transaction.
Ann. § 751.0023(c).
It should be noted that the provision dealing
A signature on a power of attorney that purports with a certification, opinion, or translation does
to be the signature of the principal is presumed not expressly have a “good faith” or “actual
to be genuine. Id. at § 751.022. A person who in knowledge” requirement. It appears that this
good faith accepts a power of attorney without defense is unqualified. But there is an argument

that a person that knows that a certification, account parties for joint accounts, P.O.D.
opinion, or translation is false did not “rely” on accounts, and trust accounts. Tex. Est. Code
it and cannot take advantage of the liability Ann. §§ 113.203, 113.204, 113.205. Moreover,
protection. “[a] financial institution that pays an amount
from a joint account to a surviving party to that
A person is not considered to have actual account in accordance with a written agreement
knowledge of a fact relating to a power of under Section 113.151 is not liable to an heir,
attorney, principal, or agent if the employee devisee, or beneficiary of the deceased party’s
conducting the transaction or activity involving estate.” Tex. Est. Code Ann. §113.207.
the power of attorney does not have actual
knowledge of the fact. Id. at § 751.211. A person The Estates Code also expressly states that
is considered to have actual knowledge of a fact payment in accordance with these provisions
relating to a power of attorney, principal, or discharges a financial institution from liability.
agent if the employee conducting the transaction Section 113.209 states:
or activity involving the power of attorney has
actual knowledge of the fact. Id. at § 751.211. (a) Payment made in
“Actual knowledge” means the knowledge of a accordance with Section
person without that person making any due 113.202, 113.203, 113.204,
inquiry and without any imputed knowledge. Id. 113.205, or 113.207 discharges
at § 751.002. the financial institution from all
claims for those amounts paid
This is a very favorable definition of actual regardless of whether the
knowledge for financial institutions. A principal payment is consistent with the
may have relationships in multiple parts of a beneficial ownership of the
financial institution: commercial (loans), retail account between parties, P.O.D.
(accounts), and fiduciary (trust administration, payees, or beneficiaries, or their
investment advisor). The fact that a person in the successors.
trust department may know something about the
principal and agent will not be imputed to the (b) The protection provided by
teller that closes a transaction for the agent. The Subsection (a) does not extend
transaction will be judged solely by the teller’s to payments made after a
actual knowledge without the teller making any financial institution receives,
inquiry with other parts of the financial from any party able to request
institution and without the teller being imputed present payment, written notice
the knowledge of the trust administrator. to the effect that withdrawals in
accordance with the terms of the
U. Defenses and Protections for Person account should not be permitted.
Accepting POA Could Be Broader Unless the notice is withdrawn
by the person giving the notice,
It is helpful to compare the protections in the the successor of a deceased
power of attorney act with other statutory party must concur in a demand
protections. Regarding joint accounts, a financial for withdrawal for the financial
institution has a statutory protection from institution to be protected under
account holders’ claims arising from the bank Subsection (a).
paying a party to the account. A multiple-party
account may be paid, on request, to any one or (c) No notice, other than the
more of the parties to that account. Tex. Est. notice described by Subsection
Code Ann. §113.202. (b) or any other information
shown to have been available to
Moreover, the Estates Code has specific a financial institution affects the
provisions allowing a financial institution to pay institution’s right to the

protection provided by activity; the person has a negative business
Subsection (a). history with the agent; the person knows that the
principal has revoked the agent’s authority; the
(d) The protection provided by agent refused to provide a certification, opinion,
Subsection (a) does not affect or translation; the person believes in good faith
the rights of parties in disputes that a certification, opinion, or translation is
between the parties or the incorrect or deficient; the person believes in
parties’ successors concerning good faith that the agent does not have authority
the beneficial ownership of to conduct the transaction; the person has
funds in, or withdrawn from, knowledge that a judicial proceeding has been
multiple-party accounts. instigated regarding the power of attorney
document or has been completed with negative
Tex. Est. Code Ann. §113.209. Therefore, a results for the document; the person receives
financial institution cannot be liable for paying conflicting instructions from co-agents; the
funds in an account to a party on the account. person has knowledge that a complaint has been
For example, in Nipp v. Broumley, the court of raised to the proper authorities that the principal
appeals noted that the defendant, as a party to may be subject to physical or financial abuse,
the account, had a right to withdraw all of the neglect, exploitation, or abandonment by the
money in the CDs he held with his mother and agent or a person acting with or on behalf of the
that the bank could not be held liable for agent; or the law that would apply to the power
allowing him to do so even though the son did of attorney document does not require the person
not have any beneficial ownership in those to accept the document.
funds. 285 S.W.3d 552 (Tex. App.—Waco
2009, no pet.). The estate’s only claims were The statute provides:
against the defendant and not the bank. See id.
See also Bandy v. First State Bank, 835 S.W.2d (1) the person would not
609, 615-16 (Tex. 1992) (holding bank is not otherwise be required to engage
liable for paying funds to one of named holders in a transaction with the
of a joint account, even after executor of other principal under the same
named holder’s estate demanded payment); circumstances, including a
Clark v. Wells Fargo Bank, N.A., No. 01-08- circumstance in which the agent
00887–CV, 2010 Tex. App. LEXIS 4376, at seeks to: (A) establish a
*12-13 (Tex. App.—Houston [1st Dist.] June customer relationship with the
10, 2010, no pet.); MBank Corpus Christi, N.A. person under the power of
v. Shiner, 840 S.W.2d 724, 727 (Tex. App.— attorney when the principal is
Corpus Christi 1992, no writ) (“Thus, between not already a customer of the
competing interests in a joint account, the bank person or expand an existing
is fully discharged from liability when it pays customer relationship with the
the other party on the account, unless one of the person under the power of
parties gives written notice to the bank that no attorney; or (B) acquire a
payment should be made.”). product or service under the
power of attorney that the
V. Grounds For Refusing Acceptance person does not offer;
A person is not required to accept a power of (2) the person’s engaging in the
attorney if: the person would not otherwise be transaction with the agent or
required to enter into a transaction with the with the principal under the
principal; the transaction would violate another same circumstances would be
law or a request from law enforcement; the inconsistent with: (A) another
person filed a SAR regarding the principal or law of this state or a federal
agent or the principal or agent has prior criminal statute, rule, or regulation; (B) a

request from a law enforcement complies with one or more of
agency; or (C) a policy adopted those requests, the requestor in
by the person in good faith that good faith is unable to
is necessary to comply with determine the validity of the
another law of this state or a power of attorney or the agent’s
federal statute, rule, regulation, authority to act under the power
regulatory directive, guidance, of attorney because the
or executive order applicable to certification, opinion, or
the person; translation is incorrect,
incomplete, unclear, limited,
(3) the person would not qualified, or otherwise deficient
engage in a similar transaction in a manner that makes the
with the agent because the certification, opinion, or
person or an affiliate 1 of the translation ineffective for its
person: (A) has filed a intended purpose, as determined
suspicious activity report as in good faith by the requestor;
described by 31 U.S.C. Section
5318(g) with respect to the (6) regardless of whether an
principal or agent; (B) believes agent’s certification, opinion of
in good faith that the principal counsel, or translation has been
or agent has a prior criminal requested or received by the
history involving financial person under this subchapter,
crimes; or (C) has had a the person believes in good faith
previous, unsatisfactory that: (A) the power of attorney
business relationship with the is not valid; (B) the agent does
agent due to or resulting in: (i) not have the authority to act as
material loss to the person; (ii) attempted; or (C) the
financial mismanagement by the performance of the requested
agent; (iii) litigation between act would violate the terms of:
the person and the agent (i) a business entity’s governing
alleging substantial damages; or documents; or (ii) an agreement
(iv) multiple nuisance lawsuits affecting a business entity,
filed by the agent; including how the entity’s
business is conducted;
(4) the person has actual
knowledge of the termination of (7) the person commenced, or
the agent’s authority or of the has actual knowledge that
power of attorney before an another person commenced, a
agent’s exercise of authority judicial proceeding to construe
under the power of attorney; the power of attorney or review
the agent’s conduct and that
(5) the agent refuses to comply proceeding is pending;
with a request for a certification,
opinion of counsel, or (8) the person commenced, or
translation under Section has actual knowledge that
751.201 or, if the agent another person commenced, a
judicial proceeding for which a
final determination was made
1
“Affiliate” means “a business entity that directly or that found: (A) the power of
indirectly controls, is controlled by, or is under
attorney invalid with respect to
common control with another business entity.” Tex.
Est. Code § 751.002(2).
a purpose for which the power

of attorney is being presented the law of that jurisdiction
for acceptance; or (B) the agent applies.
lacked the authority to act in the
same manner in which the agent Id. at § 751.206.
is attempting to act under the
power of attorney; W. Party Refusing A Power Of Attorney
Must Give A Timely Response.
(9) the person makes, has
made, or has actual knowledge Generally, if a person refuses to accept a power
that another person has made a of attorney, then that person should provide the
report to a law enforcement agent a written statement setting forth the reason
agency or other federal or state or reasons for the refusal. Id. at § 751.207.
agency, including the However, if the person is refusing the power of
Department of Family and attorney due to a reason set forth in Section
Protective Services, stating a 751.206(2) or (3), then the person shall provide
good faith belief that the to the agent a written statement signed by the
principal may be subject to person under penalty of perjury stating that the
physical or financial abuse, reason for the refusal is a reason described by
neglect, exploitation, or Section 751.206(2) or (3), and the person is not
abandonment by the agent or a required to provide any additional explanation.
person acting with or on behalf Id. at § 751.207(b). This response must be
of the agent; provided to the agent on or before the date the
person would otherwise be required to accept the
(10) the person receives power of attorney. Id. at § 751.207(c).
conflicting instructions or
communications with regard to It is very important to note that Federal law
a matter from co-agents acting requires a suspicious activity report be kept
under the same power of confidential and prohibits disclosure of a report
attorney or from agents acting of any information revealing its existence. 31
under different powers of U.S.C. § 5318(g)(2)(A); 31 CFR § 103.18(e).
attorney signed by the same Accordingly, making specific reference to
principal or another adult acting 751.206(3)(A) would likely violate federal law.
for the principal as authorized If a person has to file a SAR, and that is the
by Section 751.0021, provided basis for rejecting a power of attorney
that the person may refuse to document, the author recommends that the
accept the power of attorney person retain an attorney to provide a legal
only with respect to that matter; opinion on the person’s duties under federal law.
or The durable power of attorney act expressly
states that other laws that apply to financial
(11) the person is not required institutions trump the act’s provisions. Tex. Est.
to accept the durable power of Code Ann. § 751.007. So, if there is a conflict,
attorney by the law of the federal law would control.
jurisdiction that applies in
determining the power of X. New Vulnerable Persons Statute
attorney’s meaning and effect, Impacts Use of Power of Attorney
or the powers conferred under Documents
the durable power of attorney
that the agent is attempting to If the person is a financial institution, broker, or
exercise are not included within financial advisor, it should create policies
the scope of activities to which regarding the exploitation of vulnerable persons.
The Texas Legislature recently created new

statutes that require employees to report Y. Cause Of Action For Wrongfully
suspected financial exploitation, a person to Refusing Power Of Attorney
assess that conduct and to report to a
governmental agency, persons to institute The principal or agent may bring an action
policies for this reporting, and for persons to against a person who wrongfully refuses to
potentially put a hold on transactions where accept a power of attorney. Id. at § 751.212(a).
suspected financial exploitation is occurring. This suit may not be commenced until after the
date the person is required to accept the power
“Financial exploitation” means: of attorney. Id. at § 751.212(b). The exclusive
remedies are that the court shall order the person
(A) the wrongful or to accept the power of attorney and may award
unauthorized taking, the plaintiff court costs and reasonable and
withholding, appropriation, or necessary attorney’s fees. Id. at § 751.212(c).
use of the money, assets, or The court shall dismiss an action that was
other property or the identifying commenced after the date a written statement
information of a person; or (B) was provided to the agent. Id. at § 751.212(d). If
an act or omission by a person, the agent receives a written statement after the
including through the use of a date a timely action is commenced, the court
power of attorney on behalf of, may not order the person to accept the power of
or as the conservator or attorney, but instead may award the plaintiff
guardian of, another person, to: court costs and reasonable and necessary
(i) obtain control, through attorney’s fees. Id. at § 751.212(e). To the
deception, intimidation, fraud, contrary, a court may award costs and fees to the
or undue influence, over the defendant if: (1) the court finds that the action
other person’s money, assets, or was commenced after the date the written
other property to deprive the statement was timely provided to the agent; (2)
other person of the ownership, the court expressly finds that the refusal was
use, benefit, or possession of the permitted; or (3) Section 751.212(e) does not
property; or (ii) convert the apply and the court does not issue an order
money, assets, or other property ordering the person to accept the power of
of the other person to deprive attorney. Id. at § 751.213.
the other person of the
ownership, use, benefit, or Z. Person May Bring Suit To Construe
possession of the property. Power Of Attorney
Tex. Fin. Code Ann. § 280.001(3). A person who is asked to accept a power of
attorney may bring an action requesting a court
This statute expressly references the use of to construe, or determine the validity or
power of attorney documents. Id. Further, the enforceability of, the power of attorney. Id. at §
Texas Estates Code § 751.206(9) dealing with 751.251(b). This provision does not expressly
valid reasons to refuse to accept power of allow a person to receive an award of attorney’s
attorney documents expressly references reports fees or court costs from the agent or principal.
of financial exploitation. Tex. Est. Code § The person may potentially also assert a request
751.206(9). for a declaratory judgment regarding the
effectiveness of the power of attorney document,
So, persons should evaluate who is benefiting and that statute allows a trial court to potentially
from the transaction, and if there is evidence that award fees. Tex. Civ. Prac. & Rem. Code Ann.
the agent is benefiting, there should be an 37.009.
evaluation of whether a report of financial
exploitation should be made.

AA. Agent Can Change Rights of retirement plan, including a
Survivorship And Beneficiary retirement plan as defined by
Designations If Granted That Authority Section 752.113, an
employment agreement,
If the principal provides for such power in the including a deferred
power of attorney document, the agent may compensation agreement, and a
create or change rights of survivorship or residency agreement;
beneficiary designations.
(2) enter into or change a
1. Power To Create Or Modify P.O.D. account or trust account
Survivorship And Beneficiary under Chapter 113; or
Rights
(3) create or change a
Section 751.031 provides that if the principal nontestamentary payment or
grants the following authority in the power of transfer under Chapter 111.
attorney document, the agent may: “(1) create,
amend, revoke, or terminate an inter vivos trust; Id. at § 751.033.
(2) make a gift; (3) create or change rights of
survivorship; (4) create or change a beneficiary Under Section 752.108(b) and Sections
designation; or (5) delegate authority granted 752.113(b) and (c), unless the principal has
under the power of attorney.” Tex. Est. Code granted the authority to create or change a
Ann. 751.031(b). The provision does limit this beneficiary designation expressly as required by
right: an agent who is not “an ancestor, spouse, Section 751.031(b)(4), an agent may be named a
or descendant of the principal may not exercise beneficiary of an insurance contract, an
authority under the power of attorney to create extension, renewal, or substitute for the contract,
in the agent, or in an individual to whom the or a retirement plan only to the extent the agent
agent owes a legal obligation of support, an was named as a beneficiary by the principal
interest in the principal’s property, whether by before executing the power of attorney. Id. at §§
gift, right of survivorship, beneficiary 752.108(b), 752.113(b), (c). “If an agent is
designation, disclaimer, or otherwise.” Id. at granted authority under Section 751.031(b)(4)
§751.031(c). However, that limitation is, itself, and the durable power of attorney grants the
limited by the following clause: “[u]nless the authority to the agent described in Section
durable power of attorney otherwise provides.” 752.108 or 752.113, then, unless the power of
Id. So, if the power of attorney document attorney otherwise provides, the authority of the
expressly allows the agent to name himself or agent to designate the agent as a beneficiary is
herself as a beneficiary, the agent can do so. If not subject to the limitations prescribed by
the agent is the principal’s ancestor, spouse, or Sections 752.108(b) and 752.113(c).” Id. at
descendant, then the agent can name himself or §751.033. “If an agent is not granted authority
herself as a beneficiary. under Section 751.031(b)(4) but the durable
power of attorney grants the authority to the
Unless the power of attorney otherwise provides, agent described in Section 752.108 or 752.113,
and agent can: then, unless the power of attorney otherwise
provides and notwithstanding Section 751.031,
(1) create or change a the agent’s authority to designate the agent as a
beneficiary designation under an beneficiary is subject to the limitations
account, contract, or another prescribed by Sections 752.108(b) and
arrangement that authorizes the 752.113(c).” Id. at § 751.033(c).
principal to designate a
beneficiary, including an So, in other words, if the power of attorney
insurance or annuity contract, a document expressly allows the agent to name
qualified or nonqualified himself or herself as a beneficiary of a

retirement or insurance contract, he or she can objectives if the agent actually knows those
do so even if he or she was not previously objectives. Id. If the agent does not know the
named a beneficiary. If the power of attorney principal’s objectives, the agent may make a gift
document does not expressly allow the agent to of the principal’s property “only as the agent
name himself or herself, but there is a general determines is consistent with the principal’s best
power to enter into retirement and insurance interest based on all relevant factors, including
transactions, then the agent can name himself or the factors listed in Section 751.122 and the
herself as a beneficiary only if he or she was principal’s personal history of making or joining
previously so named by the principal. in making gifts.” Id.
2. Agent’s Gifting Powers 3. Duty To Preserve Principal’s

Estate Plan
Unless the durable power of attorney otherwise
provides, a general grant of authority to make a The statute provides that the agent should take
gift only authorizes the agent to: into account the principal’s estate plan in
making decisions:
(1) make outright to, or for the
benefit of, a person a gift of any An agent shall preserve to the
of the principal’s property, extent reasonably possible the
including by the exercise of a principal’s estate plan to the
presently exercisable general extent the agent has actual
power of appointment held by knowledge of the plan if
the principal, in an amount per preserving the plan is consistent
donee not to exceed: (A) the with the principal’s best interest
annual dollar limits of the based on all relevant factors,
federal gift tax exclusion under including: (1) the value and
Section 2503(b), Internal nature of the principal’s
Revenue Code of 1986, property; (2) the principal’s
regardless of whether the foreseeable obligations and need
federal gift tax exclusion applies for maintenance; (3)
to the gift; or (B) if the minimization of taxes, including
principal’s spouse agrees to income, estate, inheritance,
consent to a split gift as generation-skipping transfer,
provided by Section 2513, and gift taxes; and (4) eligibility
Internal Revenue Code of 1986, for a benefit, a program, or
twice the annual federal gift tax assistance under a statute or
exclusion limit; and regulation.
(2) consent, as provided by Id. at 751.122.

Section 2513, Internal Revenue
Code of 1986, to the splitting of 4. Concern With New Provisions
a gift made by the principal’s Broadening Agent’s Authority
spouse in an amount per donee
not to exceed the aggregate It is not uncommon for an agent to take
annual federal gift tax advantage of the power that he or she has
exclusions for both spouses. regarding the principal’s assets. The agent may
start taking assets for his or her own benefit, use
Id. at §751.032. the principal’s assets as collateral for a loan to
the agent, receive assets for the agent’s own
The agent may make a gift only as the agent benefit that should be deposited into the
determines is consistent with the principal’s principal’s accounts, create new accounts or

change account signature cards that create an BB. Recent Cases Dealing With Powers of
ownership interest in the agent, etc. Attorney Documents
The new provisions of the Estates Code allow a In Transamerica Life Ins. Co. v. Quarm,
principal to allow an agent to name himself or Thomas Quarm obtained a life insurance policy
herself as the beneficiary of accounts, insurance and designated his mother as his beneficiary and
products, and retirement accounts. The author his brother, Nicholas, as the alternate
has grave concerns about the way that beneficiary. No. EP-16-CV-295-KC, 2017 U.S.
vulnerable persons sign power of attorney Dist. LEXIS 192192 (W.D. Tex. November 13,
documents. Principals often have diminished 2017). Quarm later purchased an annuity
capacity at the time that power of attorney product with the same beneficiaries. When the
documents are executed. Attorneys, who are mother died, Nicholas became the primary
often retained by the agent, may not adequately beneficiary. Thomas then signed a durable
explain all of the provisions of the power of power of attorney naming his son, Christian, as
attorney document. An agent may not even his agent with the authority to act on his behalf.
retain an attorney and may simply create such a Among the powers delegated to Christian was
document (from the statutory form) and have the the power to perform any act Thomas could do
principal sign it without any explanation. regarding “[i]nsurance and annuity
transactions,” which included the power to
Principals routinely use beneficiary designations “modify . . . any [existing] annuity or
as a form of estate planning. So, the principal [insurance] policy.” Id. It also empowered
may execute a will and omit a person or Christian to “engage in any transaction he . . .
decrease a devise to that person if the principal deems in good faith to be in [the principal’s]
has otherwise already provided for that person interest, no matter what the interest or benefit to
via a beneficiary designation. If a power of [the] agent.” Id. Christian sent the power of
attorney document is signed with broad powers attorney and a beneficiary change form naming
that the principal does not really understand, the himself as the primary beneficiary and his sister,
agent may completely change the principal’s Sarah, the as the contingent beneficiary. The
estate planning by changing beneficiary insurance company determined that this form
designation. If the power of attorney document changed the beneficiary designation for both the
allows the agent to name himself or herself, then policy and the annuity. After Thomas died,
the agent can take property that should go to Christian and Nicholas made competing claims
someone else and give it to himself or herself. In to the benefits under the policy and the annuity.
any event, the agent can redirect assets from the The insurance company filed an interpleader in
person the principal originally intended to have federal court, and Christian and Nicholas filed
those assets and give them to someone else. competing claims for the proceeds and each filed
There is no need for these results. In the author’s motions for summary judgment.
opinion, the ability of an agent to effectuate
transactions for the principal’s benefit should The district court first analyzed whether
not include the ability to change beneficiary Christian’s action in naming himself was a self-
designations that only impact who gets the assets interested transaction that was a breach of
once the principal is deceased. Should an agent fiduciary duty. The court stated the law
be able to execute a new will for the principal concerning self-interested transactions thusly:
and name himself or herself as the beneficiary of
the estate or name someone else? Of course not. While an agent who benefits
Yet, that is essentially what the statute allows from a transaction carried out on
regarding non-probate assets. behalf of his principal bears the
burden of showing that the
transaction was fair, he can
meet that burden by showing
that the transaction was

authorized by the principal. The for his own benefit: “My agent may buy any
grant of a power of attorney assets of mine or engage in any transaction he or
creates an agency relationship, she deems in good faith to be in my interest, no
which is a fiduciary relationship matter what the interest or benefit to my agent.”
as a matter of law. A fiduciary Id. The court held that this language established
owes his principal a high duty that Christian was authorized to benefit from his
of good faith, fair dealing, use of the power of attorney and mentioned that
honest performance, and strict Texas courts regularly look for such language in
accountability. Multiple courts determining whether a profiting agent violated
have noted that the fiduciary his fiduciary duty. The court held that
relationship does “no more than Christian’s beneficiary change did not breach his
cast upon the profiting fiduciary fiduciary duty or constitute self-dealing.
the burden of showing the
fairness of the transactions.” The court then analyzed whether Christian acted
The court in Vogt found it in good faith as required by the power-of-
“worth repeating that fiduciary attorney document. The court held that Christian
status does not prohibit the provided evidence establishing that he acted
beneficiary from giving the fairly and in good faith when he changed the
fiduciary gifts or bequests; beneficiary and Nicholas failed to present
instead, it insures that the contrary evidence. The court noted that because
fiduciary will be prepared to the proceeds only became available after
prove the transaction was Thomas’s death, it is undisputed that Christian’s
conducted with scrupulous change of beneficiary did not deprive Thomas of
fairness.” One way to establish anything during his lifetime, reducing the
decisively that a transaction was potential for unfairness to Thomas.
fair to the principal is to show “Nevertheless, if Christian did not in good faith
that the principal consented to consider the change to be in the Decedent’s
it. Texas courts have recognized interest, he acted unfairly and outside of the
the significance of the scope of the Power of Attorney, rendering the
principal’s consent in change invalid.” Id. Christian provided evidence
determining whether a that he believed the change of beneficiary to be
transaction by a profiting agent in Thomas’s interest in that Thomas described
was fair or constituted self- his four-month stay to care for Thomas during
dealing. “Unless otherwise his prolonged illness. Christian also stated that
agreed, an agent is subject to a Thomas made it known that Thomas wished for
duty to his principal to act Christian to be designated as the beneficiary.
solely for the benefit of the This was corroborated by Thomas’s sister. The
principal in all matters court stated: “This evidence, combined with the
connected with his agency.” language in the Power of Attorney granting
Accordingly, “absent the Christian the authority to benefit from
principal’s consent, an agent transactions on Decedent’s behalf, sufficiently
must refrain from using his establishes that Christian believed in good faith
position or the principal’s that it was in the Decedent’s interest for
property to gain a benefit for Christian to be the designated beneficiary of the
himself at the principal’s Policy and Annuity Contract.” Id.
expense.”
The court, however, held that even though it was
Id. (internal citation omitted). not a breach of fiduciary duty, Christian could
not be a beneficiary of the policy and annuity.
The court noted that the power-of-attorney The court held that Christian’s use of the power
document specifically authorized Christian to act of attorney was subject to the restrictions

imposed by the Texas Estates Code. At the time demonstrate that he was
that the power of attorney was executed, the deprived of a legitimate
Code provided that “The language conferring property interest. He can do
authority with respect to insurance and annuity neither. As the discussion above
transactions in a statutory durable power of establishes, while Christian’s
attorney empowers the attorney in fact or agent designation of himself as
to . . . change the beneficiary of an insurance beneficiary of the Policy was
contract or annuity.” Id. (citing Tex. Est. Code not authorized by statute, his
Ann. § 752.108(a)(10)). The court noted that this actions did not constitute self-
power was strictly limited where the agent dealing or breach any duty he
attempts to designate himself as beneficiary: held as fiduciary. Furthermore,
“An attorney in fact or agent may be named a Christian was authorized by
beneficiary of an insurance contract or an statute to designate Sarah as the
extension, renewal, or substitute for the contract contingent beneficiary of the
only to the extent the attorney in fact or agent Policy and the Annuity
was named as a beneficiary under a contract Contract. Accordingly,
procured by the principal before executing the Christian acted lawfully in
power of attorney.” Id. (citing Tex. Est. Code removing Nicholas as the
Ann. § 752.108 (b)). Further, “Unless the beneficiary of the Policy and
principal has granted the authority to create or Annuity Contract, and Nicholas
change a beneficiary designation expressly . . . cannot recover against him for
an agent may be named a beneficiary of an it.
insurance contract . . . only to the extent the
agent was named as a beneficiary by the Id. Therefore, the court held that neither
principal.” Id. Christian or Nicholas were entitled to the
proceeds, Christian’s sister was entitled to those
The court held that as Christian had not funds.
previously been named as beneficiary, he was
not authorized to name himself beneficiary of Interesting Note: The court also held that
the policy or annuity. However, the court noted “Texas courts apply the law that was in place at
that his designation of his sister Sarah as the the time the power of attorney was executed
contingent beneficiary was authorized by both rather than the current law.” Id. (citing Wise v.
the statute and the power of attorney: “Christian Mitchell, 2016 WL 3398447, at *8 (Tex. App.
was therefore authorized to remove Nicholas as 2016) (applying sections of Probate Code—now
a beneficiary of the Policy and designate anyone Estates Code—that were in place “at the time
but himself as a beneficiary in his place… the Power of Attorney was executed”); Cole v.
Barker is the proper beneficiary of the Policy McWillie, 464 S.W.3d 896, 898 (Tex. App.
and is legally entitled to collect the remaining 2015) (finding that power of attorney was not
Policy funds.” Id. durable under the Probate Code that “was in
effect at the time of the execution of the power
Finally, the court held that Nicholas’s cross- of attorney”); cf. Randall v. Kreiger, 90 U.S.
claims for breaches of various fiduciary duties, 137, 138-39, 23 L. Ed. 124 (1874) (holding that
conversion, trespass to chattels, violation of the a power of attorney that was invalid at the time
Theft Liability Act, and tortious interference it was made was validated by a curative act only
with inheritance failed because Nicholas did not because the act was explicitly retroactive)). The
have standing to assert them. The court held: court noted that in September 2017, the Texas
Estates Code was amended to read, “Unless the
To bring these claims, Nicholas principal has granted the authority to create or
must show that he has standing change a beneficiary designation expressly . . .
as the principal in a fiduciary an agent may be named a beneficiary of an
relationship with Christian or insurance contract . . . only to the extent the

agent was named as a beneficiary by the source of them and the withdrawal was legal and
principal.” Tex. Est. Code Ann. § 752.108(b). authorized because the power of attorney
Accordingly, because the power of attorney was allowed the brother to undertake banking
executed in October 2015, the court applied the transactions.
2015 statute and not the 2017 amendment.
A bank employee testified that the sister in law
In Fletcher v. Whitaker, a brother withdrew was a joint owner and that each joint owner on
$25,000 from a joint bank account while the the account had “full rights to access” the funds.
owner of the funds (decedent) was still alive. The court concluded that this was some evidence
No. 02-17-00138-CV, 2018 Tex. App. LEXIS that the sister in law had the right to possess the
8329 (Tex. App.—Fort Worth October 11, 2018, joint account’s funds. Regarding whether the
no pet. history). The parties to the joint account brother unlawfully and without authorization
were the decedent and his sister in law. The assumed and exercised control over the funds to
brother was the decedent’s agent under a power- the exclusion of, or inconsistent with, the sister
of-attorney document and had the authority to do in law’s rights, the court noted that the brother
banking transactions. That relationship also admitted that when he withdrew the money, he
meant that the brother owed fiduciary duties to knew (1) that the account was a joint account
the decedent. The decedent’s sister in law sued with right of survivorship, (2) that the sister in
the brother for conversion of the funds he law had full access to the account, and (3) that
withdrew from the account. The trial court she would own the funds when the decedent
determined in a bench trial that the brother died. The brother further admitted that he used
wrongfully exercised dominion and control over the power of attorney to withdraw the money to
the money to the exclusion of, or inconsistent ensure that the sister in law did not get the
with, the sister in law’s rights. The brother money and that he deposited the check into his
appealed. own checking account. There was no evidence
that the brother had used the funds for the
The court of appeals first discussed a conversion decedent’s care. The brother did not dispute that
claim, which is the wrongful exercise of he breached a fiduciary duty by withdrawing the
dominion and control over another’s property in money and using it for his benefit. The court of
denial of or inconsistent with one’s rights. The appeals affirmed the trial court’s judgment and
court mentioned that money is subject to held the trial court could have reasonably
conversion only when it can be identified as a concluded that when the brother withdrew the
specific chattel but not if it is an indebtedness money from the joint account, the brother was
that can be discharged by the payment of money. not acting in the decedent’s interests but was
“To qualify as a specific chattel, the money must using the power of attorney to wrongfully
be (1) delivered for safekeeping, (2) intended to exercise dominion and control over the money to
be kept segregated, (3) substantially in the form the exclusion of, or inconsistent with, the sister
in which it is received or in an intact fund, and in law’s rights.
(4) not the subject of a title claim by its keeper.”
Id. The brother, however, apparently did not In Cortes v. Wendl, an elderly woman signed a
raise an issue about whether the sister in law deed conveying her mineral rights to two
could assert a conversion claim due to the fact individuals. No. 06-17-00121-CV, 2018 Tex.
that she was only seeking money. App. LEXIS 4457 (Tex. App.—Texarkana June
20, 2018, no pet.). When the woman’s nurse and
Rather, the brother contended that the evidence friend learned of the transaction, she obtained a
was insufficient to show that he unlawfully and power of attorney and filed a lawsuit on the
without authorization assumed or exercised woman’s behalf, claiming that the mineral deed
control over the sister in law’s property to the was executed as a result of duress, coercion, and
exclusion of, or inconsistent with, her rights as undue influence, and that no consideration was
owner. He argued that the sister in law did not paid for the conveyance. The defendants alleged
own the funds because the decedent was the sole that the plaintiff had no capacity to sue. The

court of appeals affirmed the trial court’s III. EXPLOITATION OF VULNERABLE
implied finding that the plaintiff had capacity: PERSONS STATUTE
“A power of attorney is a A. Introduction

written instrument by which one
person, the principal, appoints The Texas Legislature passed, and the Governor
another person, the attorney-in- signed, an act that creates new protections for
fact, as agent and confers on the vulnerable individuals. HB 3921 creates a new
attorney-in-fact the authority to chapter 280 of the Texas Finance Code and a
perform certain specified acts new Article 581, Section 45, of the Texas
on behalf of the principal.” An Securities Act in the Texas Civil Statutes. The
agent has express authority to Texas Legislature now requires employees to
take all actions designated by report suspected incidences of financial
the principal. An agent has exploitation to their employers, and for the
implied authority “to do financial institution, security dealers, or financial
whatever is necessary and adviser to similarly make reports to the Texas
proper to carry out the agent’s Department of Family and Protective Services
express powers.” Wendl (the “Department”). This legislation took effect
introduced the durable power of September 1, 2017. Legislative history provides:
attorney executed by Hardy as
an exhibit, without objection. Interested parties contend that
The power of attorney explicitly certain vulnerable adults lose a
granted Wendl: “[a]uthority to significant amount of money
initiate a claim and litigation, if each year to fraud and financial
necessary; negotiate; make exploitation. H.B. 3921 seeks to
decisions; and pursue the legal protect the financial well-being
claim [Hardy] may have against of these individuals by
Johnny Coutts, Charles [Randy] authorizing financial
Hardy, and/or Isabel Cortes, or institutions, securities dealers,
anyone else involved, and to and investment advisers to place
pursue those claims or litigation a hold on suspicious
as she sees fit for [Hardy] transactions involving these
and/or [Hardy’s] estate. [Wendl] vulnerable adults and by
is further given specific requiring the reporting of
authority to negotiate and make suspected financial exploitation.
all decisions on [Hardy’s]
behalf including accepting or B. Definitions Of Vulnerable Person And
rejecting offers of settlement, Financial Exploitation
contracting for and payment of
attorney’s fees, and costs.” The A “vulnerable adult” means someone who is
record supports the trial court’s sixty-five (65) years or older or a person with a
implied finding that Wendl, in disability. Tex. Fin. Code Ann. § 280.001. The
her capacity as agent and term “exploitation” means: “the act of forcing,
attorney-in-fact for Hardy, had compelling, or exerting undue influence over a
the capacity to bring the lawsuit person causing the person to act in a way that is
on Hardy’s behalf inconsistent with the person’s relevant past
behavior or causing the person to perform
Id. The court then analyzed whether there was services for the benefit of another person.” Id. at
sufficient evidence to establish that the deed was § 280.001(2).
procured by undue influence, and found that
there was sufficient evidence. “Financial exploitation” means:

(A) the wrongful or 2. Financial Institution Reporting
unauthorized taking, Obligation
withholding, appropriation, or
use of the money, assets, or If an employee makes such a report or the
other property or the identifying financial institution otherwise has cause to
information of a person; or (B) believe a reportable event has occurred, then the
an act or omission by a person, financial institution shall assess the suspected
including through the use of a financial exploitation and submit a report to the
power of attorney on behalf of, Department. Id. at § 280.002. The report shall
or as the conservator or include: (1) the name, age, and address of the
guardian of, another person, to: elderly person or person with a disability; (2) the
(i) obtain control, through name and address of any person responsible for
deception, intimidation, fraud, the care of the elderly person or person with a
or undue influence, over the disability; (3) the nature and extent of the
other person’s money, assets, or condition of the elderly person or person with a
other property to deprive the disability; (4) the basis of the reporter’s
other person of the ownership, knowledge; and (5) any other relevant
use, benefit, or possession of the information. Id. (citing Tex. Hum. Res. Code §
property; or (ii) convert the 48.051). The financial institution should submit
money, assets, or other property the report not later than the earlier of: (1) the
of the other person to deprive date it completes an assessment of the suspected
the other person of the financial exploitation; or (2) the fifth business
ownership, use, benefit, or day after the date the financial institution is
possession of the property. notified of the suspected financial exploitation
or otherwise has cause to believe that the
Tex. Fin. Code Ann. § 280.001(3). suspected financial exploitation has occurred, is
occurring, or has been attempted. Id.
C. Financial Institutions Furthermore, a financial institution may at the
time the financial institution submits the report
1. Employee Reporting Obligation also notify a third party reasonably associated
with the vulnerable adult of the suspected
Section 280.002 provides that “if an employee financial exploitation, unless the financial
of a financial institution has cause to believe that institution suspects that the third party is guilty
financial exploitation of a vulnerable adult who of financial exploitation of the vulnerable adult.
is an account holder with the financial institution Id. at § 280.003.
has occurred, is occurring, or has been
attempted, the employee shall notify the 3. Who Are “Account Holders”?
financial institution of the suspected financial
exploitation.” Tex. Fin. Code Ann. § 280.002. The statute does not define “account” or
“Financial Institution” means: “a state or “account holder.” Texas Estate’s Code section
national bank, state or federal savings and loan 113.001 provides that “account” means “a
association, state or federal savings bank, or contract of deposit of funds between the
state or federal credit union doing business in depositor and a financial institution. The term
this state.” Tex. Fin. Code Ann. § 277.001. includes a checking account, savings account,
certificate of deposit, share account, or other
From a practical perspective, this provision similar arrangement.” Tex. Est. Code §
requires employers to educate and train 113.001(1) (emphasis added). The vague term:
employees about financial exploitation so that “or other similar arrangement” does not provide
they know when to suspect that it is occurring. a lot of limitation on what is meant by
“account.”

Section 113.004 describes multiple types of 113.004(5). The deposit agreement is not
accounts, including convenience accounts, joint required to address payment to the beneficiary.
accounts, multi-party accounts, POD accounts, Id. The term does not include: (A) a regular
and trust accounts. Tex. Est. Code Ann. § trust account under a testamentary trust or a trust
113.004. agreement that has significance apart from the
account; or (B) a fiduciary account arising from
“Convenience account” means an account that: a fiduciary relationship, such as the attorney-
“(A) is established at a financial institution by client relationship.” Id.
one or more parties in the names of the parties
and one or more convenience signers; and (B) There are also definitions for retirement
has terms that provide that the sums on deposit accounts in Estate’s Code Section 111.051.
are paid or delivered to the parties or to the
convenience signers “for the convenience” of 4. Financial Institution’s Ability
the parties.” Id. at § 113.004(1). To Place A Hold On
Transactions
“Joint account” means “an account payable on
request to one or more of two or more parties, If a financial institution submits a report, it “(1)
regardless of whether there is a right of may place a hold on any transaction that: (A)
survivorship.” Id. at § 113.004(2). involves an account of the vulnerable adult; and
(B) the financial institution has cause to believe
“Multiple-party account” means a “joint is related to the suspected financial exploitation;
account, a convenience account, a P.O.D. and (2) must place a hold on any transaction
account, or a trust account.” Id. at § 113.004(3). involving an account of the vulnerable adult if
The term does not include an account the hold is requested by the Department or a law
established for the deposit of funds of a enforcement agency.” Id. at § 280.004. This hold
partnership, joint venture, or other association generally expires ten business days after the
for business purposes, or an account controlled report was submitted. Id. The financial
by one or more persons as the authorized agent institution may extend a hold for an additional
or trustee for a corporation, unincorporated thirty business days “if requested by a state or
association, charitable or civic organization, or a federal agency or a law enforcement agency
regular fiduciary or trust account in which the investigating the suspected financial
relationship is established other than by deposit exploitation.” Id. The financial institution may
agreement. Id. also petition a court to extend a hold. Id.
“P.O.D. account,” including an account 5. Duty To Create Policies

designated as a transfer on death or T.O.D.
account, means “an account payable on request The statute requires that a financial institution
to: (A) one person during the person’s lifetime adopt internal policies, programs, plans, or
and, on the person’s death, to one or more procedures for: (1) the employees of the
P.O.D. payees; or (B) one or more persons financial institution to make the notification; and
during their lifetimes and, on the death of all of (2) the financial institution to conduct the
those persons, to one or more P.O.D. payees.” assessment and submit the report. Id. at §
Id. at § 113.004(4). 280.002(d). These policies may authorize the
financial institution to make a report to other
“Trust account” means “an account in the name appropriate agencies and entities. Id. at §
of one or more parties as trustee for one or more 280.002(e). A financial institution shall also
beneficiaries in which the relationship is adopt internal policies, programs, plans, or
established by the form of the account and the procedures for placing a hold on a transaction.
deposit agreement with the financial institution Id. at § 280.004.
and in which there is no subject of the trust other
than the sums on deposit in the account.” Id. at §

6. Immunity the dealer or investment adviser has occurred, is
occurring, or has been attempted, the dealer or
An employee or financial institution that makes investment adviser shall assess the suspected
a report to the Department or to a third party is financial exploitation and submit a report to the
immune from any civil or criminal liability Securities Commissioner and the Department.
unless the employee or financial institution acted The dealer or investment adviser shall submit
in bad faith or with a malicious purpose. Id. at § the reports not later than the earlier of: (1) the
280.005. Further, a financial institution that in date the dealer or investment adviser completes
good faith and with the exercise of reasonable the dealer’s or investment adviser’s assessment
care places or does not place a hold on any of the suspected financial exploitation; or (2) the
transaction is immune from any civil or criminal fifth business day after the date the dealer or
liability or disciplinary action resulting from that investment adviser is notified of the suspected
action or failure to act. Id. at § 280.005. financial exploitation or otherwise has cause to
believe that the suspected financial exploitation
7. Records has occurred, is occurring, or has been
attempted. If a dealer or investment adviser
A financial institution shall provide access to or submits reports, they may also notify a third
copies of records relevant to the suspected party reasonably associated with the vulnerable
financial exploitation to the Department, law adult of the suspected financial exploitation,
enforcement or a prosecuting attorney. The unless the dealer or investment adviser suspects
provisions in Texas Finance Code Section the third party of financial exploitation of the
59.006 relating to notice and reimbursement for vulnerable adult.
customer records do not apply to these
provisions. 3. Duty To Create Policies
D. Securities Dealers and Financial Each dealer and investment adviser shall adopt
Advisers internal policies, programs, plans, or procedures
for the securities professionals or persons
1. Professionals’ Duties To serving in a legal capacity for the dealer or
Report. investment adviser to make the notification and
for the dealer or investment adviser to conduct
The new statute provides that if a securities the assessment and submit reports. The policies,
professional has cause to believe that financial programs, plans, or procedures may authorize
exploitation of a vulnerable adult who is an the dealer or investment adviser to report the
account holder with the dealer or investment suspected financial exploitation to other
adviser has occurred, is occurring, or has been appropriate agencies and entities in addition to
attempted, the securities professional shall notify the Securities Commissioner and the
the dealer or investment adviser of the suspected Department, including the attorney general, the
financial exploitation. “Securities professionals” Federal Trade Commission, and the appropriate
are agents, investment adviser representatives, or law enforcement agency. Each dealer and
persons who serve in a supervisory or investment adviser shall also adopt internal
compliance capacity for a dealer or investment policies, programs, plans, or procedures for
adviser. placing a hold on a transaction.
2. Dealer’s/Investment Adviser’s 4. Ability To Place Hold On

Duty To Report Transactions
If a dealer or investment adviser is notified of If a dealer or investment adviser submits reports,
suspected financial exploitation or otherwise has they: (1) may place a hold on any transaction
cause to believe that financial exploitation of a that involves an account of the vulnerable adult,
vulnerable adult who is an account holder with and the dealer or investment adviser has cause to

believe is related to the suspected financial believe that an elderly person, a person with a
exploitation; and (2) must place a hold on any disability, or an individual receiving services
transaction involving an account of the from a provider as described by Subchapter F is
vulnerable adult if the hold is requested by the in the state of abuse, neglect, or exploitation
Securities Commissioner, the Department, or a shall report the information required by
law enforcement agency. The hold expires ten Subsection (d) immediately to the department.”
business days after the date the dealer or Tex. Hum. Res. Code § 48.051. In the Texas
investment adviser submits the reports. This can Human Resources Code, the term “exploitation”
be extended for up to thirty business days if means “the illegal or improper act or process of
requested by a state or federal agency or a law a caretaker, family member, or other individual
enforcement agency investigating the suspected who has an ongoing relationship with an elderly
financial exploitation. The dealer or investment person or person with a disability that involves
adviser may also petition a court to extend a using, or attempting to use, the resources of the
hold placed on any transaction. elderly person or person with a disability,
including the person’s social security number or
5. Immunity other identifying information, for monetary or
personal benefit, profit, or gain without the
A securities professional, dealer, or investment informed consent of the person.” Id. at § 48.002.
adviser who makes a notification or report or Importantly, the Texas Human Resources Code
who testifies or otherwise participates in a provides a criminal penalty for not reporting the
judicial proceeding is immune from any civil or exploitation: “[a] person commits an offense if
criminal liability arising from the notification, the person has cause to believe that an elderly
report, testimony, or participation in the judicial person or person with a disability has been
proceeding, unless the securities professional, abused, neglected, or exploited or is in the state
person serving in a legal capacity for the dealer of abuse, neglect, or exploitation and knowingly
or investment adviser, or dealer or investment fails to report in accordance with this chapter.”
adviser acted in bad faith or with a malicious Id. at § 48.052. Generally, this offense is a Class
purpose. A dealer or investment adviser that in A misdemeanor. Id. The Texas Human
good faith and with the exercise of reasonable Resources Code has similar immunity defenses
care places or does not place a hold on any for making reports. Id. § 48.054.
transaction is immune from civil or criminal
liability or disciplinary action resulting from the Courts have held that the qualified immunity
action or failure to act. defense is an affirmative defense and that the
defendant has the burden of showing that a
6. Records defendant was not acting “in bad faith or with a
malicious purpose”—i.e., in good faith—when
A dealer or investment adviser shall provide on he made his report of elder abuse. Scarbrough v.
request access to or copies of records relevant to Purser, No. 03-13-00025-CV, 2016 Tex. App.
the suspected financial exploitation to the LEXIS 13863 (Tex. App.—Austin December
Department, law enforcement or a prosecuting 30, 2016, pet. denied).
attorney.
Texas Family Code Section 261.106 also
E. Other Reporting Duties provides that: “[a] person acting in good faith
who reports or assists in the investigation of a
The Texas Human Resources Code has a general report of alleged child abuse or neglect or who
provision that requires the reporting of the testifies or otherwise participates in a judicial
exploitation of elderly or disabled individuals. proceeding arising from a report, petition, or
Newspaper Holdings, Inc. v. Crazy Hotel investigation of alleged child abuse or neglect is
Assisted Living, Ltd., 416 S.W.3d 71, 89 (Tex. immune from civil or criminal liability that
App.—Houston [1st Dist.] 2013, pet. denied). might otherwise be incurred or imposed.” Tex.
Section 48.051 states: “a person having cause to Fam. Code Ann. § 261.106(a). Courts have held

that this qualified defense is an affirmative person may assert this claim
defense that a defendant has the duty to raise and against any person not having
prove. Miranda v. Byles, 390 S.W.3d 543, 552 the rights of a holder in due
(Tex. App.—Houston [1st Dist.] 2012, pet. course. A taker cannot be a
denied); Howard v. White, No. 05-01-01036- holder in due course if he has
CV, 2002 Tex. App. LEXIS 4891, at *18-20 notice of the claim of the
(Tex. App.—Dallas July 10, 2002, no pet.) (not represented person. Section 3-
designated for publication) (concluding that 307 determines when the taker
appellant was not entitled to statutory protection has notice of such a claim that
from defamation claims based on her report of prevents her from becoming a
child abuse because she failed to prove that her holder in due course.
report was made in good faith).
6 WILLIAM D. HAWKLAND & LARRY
Importantly, the new provisions provide that LAWRENCE, UNIFORM COMMERCIAL
complying with those reporting obligations also CODE SERIES § 3-307:3 (Rev. Art. 3) (1999).
satisfies the reporting obligations under the
Texas Human Resources Code. So, there is no Section 3.307(b) of the Texas Business and
duty to make multiple reports. Commerce Code states:
F. Application of U.C.C. Section 3.307 To If (i) an instrument is taken

Notice Of Financial Exploitation from a fiduciary for payment or
collection or for value, (ii) the
The statutory definition of “financial taker has knowledge of the
exploitation” seems very broad. Financial fiduciary status of the fiduciary,
institutions, dealers, and financial advisers and (iii) the represented person
should be aware of another provision that makes a claim to the instrument
dictates when a financial institution has notice of or its proceeds on the basis that
a breach of fiduciary duty. Texas Business and the transaction of the fiduciary
Commerce Code Section 3.307 sets forth the is a breach of fiduciary duty, the
rules dictating when a taker of an instrument following rules apply:
would lose its holder-in-due-course status and
potentially make financial institutions vulnerable (1) notice of breach of fiduciary
to other causes of action, such as conversion due duty by the fiduciary is notice of
to having notice of fiduciary breaches. Tex. Bus. the claim of the represented
& Com. Code Ann. § 3.307. Section 307 has person;
been explained in this way:
(2) in the case of an instrument
When a fiduciary holds an payable to the represented
instrument in trust for or on person or the fiduciary as such,
behalf of the represented person, the taker has notice of the
he is usually authorized to breach of fiduciary duty if the
negotiate the instrument only instrument is:
for the benefit of the represented
person. When the fiduciary (A) taken in payment of or as
negotiates the instrument for his security for a debt known by the
own benefit rather than for the taker to be the personal debt of
benefit of the represented the fiduciary;
person in breach of his trust, an
equitable claim of ownership on (B) taken in a transaction
the part of the represented known by the taker to be for the
person arises. The represented

personal benefit of the Duty, Knowing Participation, Or
fiduciary; or Conspiracy
(C) deposited to an account When an exploiter takes advantage of a

other than an account of the vulnerable person, the exploiter often does not
fiduciary, as such, or an account make wise investments with the wrongfully
of the represented person; obtained assets. In other words, when someone
attempts to retrieve those assets for the
(3) if an instrument is issued by vulnerable person or his or her estate, the
the represented person or the exploiter may be judgment proof. So, the
fiduciary as such, and made plaintiff will often look to others who have
payable to the fiduciary deeper pockets and may be able to pay a
personally, the taker does not judgment. There are several theories in Texas
have notice of the breach of that allow a plaintiff to sue a third party for the
fiduciary duty unless the taker exploiter’s bad conduct.
knows of the breach of fiduciary
duty; and When a third party knowingly participates in the
breach of a fiduciary duty, the third party
(4) if an instrument is issued by becomes a joint tortfeaser and is liable as such.
the represented person or the Kinzbach Tool Co. v. Corbett-Wallace Corp.,
fiduciary as such, to the taker as 138 Tex. 565, 160 S.W.2d 509, 513-14 (Tex.
payee, the taker has notice of 1942); Kaster v. Jenkins & Gilchrist, P.C., 231
the breach of fiduciary duty if S.W.3d 571, 580 (Tex. App.—Dallas 2007, no
the instrument is: pet.); Brewer & Pritchard, P.C. v. Johnson, 7
S.W.3d 862, 867 (Tex. App.—Houston [1st
(A) taken in payment of or as Dist.] 1999), aff’d on other grounds, 73 S.W.3d
security for a debt known by the 193 (2002). The elements are: (1) a breach of
taker to be the personal debt of fiduciary duty by a third party, (2) the aider’s
the fiduciary; knowledge of the fiduciary relationship between
the fiduciary and the third party, and (3) the
(B) taken in a transaction aider’s awareness of his participation in the third
known by the taker to be for the party’s breach of its duty. Darocy v. Abildtrup,
personal benefit of the 345 S.W.3d 129, 137-38 (Tex. App.—Dallas
fiduciary; or 2011, no pet). There may also be an aiding-and-
abetting-breach-of-fiduciary-duty claim in
(C) deposited to an account Texas. See First United Pentecostal Church of
other than an account of the Beaumont v. Parker, 2017 Tex. LEXIS 295
fiduciary, as such, or an account (Tex. Mar. 17, 2017) (assumed that such a claim
of the represented person. existed in Texas but held that it was not
expressly so holding).
Tex. Bus. & Com. Code Ann. § 3.307.
A civil conspiracy involves a combination of
Although the definition of financial exploitation two or more persons to accomplish an unlawful
is broader than the provisions of Section 3.307, purpose, or to accomplish a lawful purpose by
Section 3.307 is a good place to start to unlawful means. Tilton v. Marshall, 925 S.W.2d
determine whether there is notice that financial 672, 681 (Tex. 1996). An action for civil
exploitation may be occurring. conspiracy has five elements: (1) a combination
of two or more persons; (2) the persons seek to
G. New Provisions Application To Aiding accomplish an object or course of action; (3) the
And Abetting Breach Of Fiduciary persons reach a meeting of the minds on the
object or course of action; (4) one or more

unlawful, overt acts are taken in pursuance of adviser have any duty to investigate or
the object or course of action; and (5) damages report under this statute any exploitation
occur as a proximate result. Id. of vulnerable persons who are not
account holders? What if they are
The point is that a plaintiff may allege that the borrowers or attempted borrowers?
financial institution, dealer, or financial adviser Presumably, the Texas Human
knew of the exploiter’s fiduciary relationship, Resources Code provisions will still
knew that breaches were occurring, and still apply even if the other newer provisions
assisted in completing the transactions. The do not.
plaintiff may cite to these new broad statutes
(and Section 3.307) as giving legal definition to 3) What evidence will be necessary to raise
when a financial institution, dealer, or financial a “cause to believe” that employees or
adviser has notice of breach of fiduciary duty. If financial institutions, dealers, and
the financial institution, dealer, or financial financial advisers should make a report?
adviser did not properly report financial
exploitation as required by the statutes, then the 4) What will the assessment entail? Does
plaintiff will certainly take advantage of that fact the financial institution, dealer, or
in proving liability and/or exemplary damages. financial adviser have a duty to
Accordingly, these new statutes may have far- investigate “outside the walls”? If the
reaching ramifications for financial institutions, assessment leads to the belief that no
dealers, or financial advisers beyond the express exploitation has occurred, does there
words in those statutes. still have to be a report?
H. Conclusion Regarding Financial 5) The definition of “financial

Exploitation Statutes exploitation” is very broad and would
also seem to include even proper
Certainly, the author agrees that financial behavior, such as a power-or-attorney
exploitation of vulnerable individuals is bad and holder/ agent reasonably compensating
should be punished. However, the new himself or herself for their services.
provisions seem to be very broad and have What duties will financial institutions,
vague aspects that place new duties on financial dealers, and financial advisers have to
institutions, dealers, financial advisers and their report proper behavior that seems to fit
employees. These duties also seem to be placed within the broad definition of “financial
at the expense of the financial institutions, exploitation”?
dealers, and financial advisers. These new
provisions raise many questions: 6) If financial institutions, dealers, and
financial advisers have to file suit to
1) When should financial institutions, extend a hold, can they seek attorney’s
dealers, and financial advisers be fees and costs from the vulnerable
imputed with knowledge that a client is individual and/or the exploiter?
a vulnerable person? Is it just actual
knowledge or should there be a “should 7) Do the new statutes create duties that a
have known” component? Is the vulnerable individual can later use as a
knowledge of one employee imputed to basis for a negligence suit? Would
all other employees? negligence per se apply? Can vulnerable
individuals sue financial institutions,
2) The burden to make a report involves dealers, and financial advisers for not
vulnerable persons who have an account assessing or reporting financial
with financial institutions, dealers, and exploitation or placing or extending a
financial advisers. Does an employee or hold that then leads to damages to the
financial institution, dealer, or financial vulnerable individuals?

8) When do financial institutions, dealers, circumstances under which a financial institution
and financial advisers have to adopt must file a suspicious activity report ("SAR").
internal policies, programs, plans, or The Office of the Comptroller of the Currency
procedures regarding assessing and ("OCC"), Board of Governors of the Federal
reporting financial exploitation and Reserve System ("FRB"), Federal Deposit
regarding holds? Do these have to be in Insurance Corporation ("FDIC") and the
writing or can they be oral? Does a Financial Crimes Enforcement Network
defendant have to turn these over in ("FinCEN") have each issued regulations which
litigation? Can these be used to set a are codified at 12 C.F.R. § 21.11 (OCC); 12
standard of care, such that if financial C.F.R. § 208.62 (FRB); 12 C.F.R. pt. 353
institutions, dealers, and financial (FDIC); and 12 C.F.R. § 1020.320 (FinCEN),
advisers have higher internal policies, respectively. SARs are filed electronically with
programs, plans, or procedures than FinCEN through the BSA E-Filing System. The
what is required by law, will the regulations are intended to ensure that
defendants have to meet their higher institutions file SARs when they detect a known
standards? or suspected violation of Federal law or a
suspicious transaction related to money
9) With regard to immunity, what are the laundering activity or a violation of the Bank
legal standards for proving “bad faith or Secrecy Act.
with a malicious purpose”? Who has the
burden to prove that a report was made A. Reporting Requirements.
in “bad faith or with a malicious
purpose”? Is the defendant presumed to The regulations set forth situations in
act in good faith? which an institution must file a SAR. In general,
the situations are as follows:
10) With regard to immunity for holds, what
are the standards for “good faith and 1) insider abuse involving any amount;
with the exercise of reasonable care”?
Does reasonable care involve what a 2) violations aggregating $5,000 or more
reasonably prudent financial institution, where a suspect can be identified;
dealer, or financial adviser would do or
simply what a normal person would do? 3) violations aggregating $25,000 or more
Will the parties be required to have regardless of potential suspects; and
expert evidence on the standard of care?
If financial institutions, dealers, and 4) transactions aggregating $5,000 or more
financial advisers are in good faith, but that involve potential money laundering or
do not exercise reasonable care, are they violate the bank secrecy act.
able to claim immunity? If there is no
immunity, what potential damages can a 12 C.F.R. § 21.11(c)(OCC); 12 C.F.R. §
vulnerable individual claim (direct or 208.62(c)(FRB); and 12 C.F.R.
consequential damages)? § 353.3(a)(FDIC).
IV. SUSPICIOUS ACTIVITY REPORTS 2 B. Time for Reporting.
The federal banking agencies have each An institution must file the SAR no later
issued regulations setting forth the than 30 calendar days after the date of initial
detection of facts that may constitute a basis for
filing a SAR.
2
The Author would like to thank Mike O’Neal for his
assistance in the drafting of this section of the paper.
Mike works at Winstead and specializes in financial
institution corporate and regulatory matters.

12 C.F.R. § 21.11(d)(OCC); 12 C.F.R. confidential. For example, the OCC regulation
§ 208.62(d)(FRB); and 12 C.F.R. states, in part, the following:
§ 353.3(b)(FDIC).
A SAR, and any information
C. Where to File. that would reveal the
existence of a SAR, are
SARs are filed electronically with the confidential and shall not be
Treasury Department's Financial Crimes
disclosed except as
Enforcement Network (FinCEN), through the
BSA E-Filing System. authorized in this paragraph
(k).
12 C.F.R. § 21.11(e)(OCC); 12 C.F.R.
§ 208.62(c)(FRB); and 12 C.F.R. (1) No national bank, and no
§ 353.3(9)(FDIC). director, officer,
employee, or agent of a
D. Failure to File. national bank, shall
disclose a SAR or any
The failure to file reports can lead to information that would
supervisory action (e.g., civil money penalties). reveal the existence of a
For example, the OCC regulation expressly
SAR. Any national bank,
provides that "failure to file a SAR in
accordance with this section and the instructions and any director, officer,
may subject the national bank, its directors, employee, or agent of any
officers, employees, agents, or other institution- national bank that is
affiliated parties to supervisory action." subpoenaed or otherwise
requested to disclose a
12 C.F.R. § 21.11(i)(OCC); see also 12 C.F.R. SAR, or any information
§ 208.62(i)(FRB). that would reveal the
existence of a SAR, shall
E. Notification to the Bank's Board of decline to produce the
Directors.
SAR or such information,
If a SAR is filed, management must citing this section and 31
promptly notify its board of directors of the U.S.C. 5318(g)(2)(A)(i),
SAR. The board must make a note of such and shall notify the
report in its minutes. If an institution files a following of any such
SAR and the suspect is a director or executive request and the response
officer, the institution may not notify the thereto:
suspect, but must notify all directors who are not
suspects. (A) Director, Litigation
Division, Office of
12 C.F.R. § 21.11(h)(OCC); 12 C.F.R. the Comptroller of
§ 208.62(h)(FRB); and 12 C.F.R.
the Currency; and
§ 353.3(f)(FDIC).
F. Confidentiality.
(B) The Financial Crimes
Enforcement
The regulations also deal with the issue Network (FinCEN).
of an institution being subpoenaed for a SAR.
The regulations expressly state that SARs are 12 C.F.R. § 21.11(k).

G. Liability for Disclosure of Information. to provide notice of such
disclosure to any person
In the Annunzio-Wylie Anti-Money identified in the disclosure, or
Laundering Act, Congress saw fit to explicitly both, to the full extent
provide immunity from civil liability for an
provided by 31 U.S.C.
institution's disclosure of information required
by federal law. Pub.L. 102-550, 106 Stat. 4059 5318(g)(3).
(1992) (codified at 31 U.S.C. § 5318). The
statute creating this safe harbor provides in part: 12 C.F.R. § 21.11(l).
Any financial institution that H. SARs and Financial Exploitation

makes a disclosure of any On February 22, 2011, the Department of the
possible violation of law or Treasury Financial Crimes Enforcement
regulation or a disclosure Network issued an Advisory to Financial
pursuant to this subsection or Institutions on Filing Suspicious Activity
any other authority . . . shall Reports Regarding Elder Financial Exploitation.
not be liable to any person This report described the interplay between
under any law or regulation SARs and financial exploitation. It provides:
of the United States or any
constitution, law or The Financial Crimes
Enforcement Network
regulation of any State or
(FinCEN) is issuing this
political subdivision thereof, advisory to assist the financial
for such disclosure or for any industry in reporting instances
failure to notify the person of financial exploitation of the
involved in the transaction or elderly, a form of elder abuse.
any other person of such Financial institutions can play a
disclosure. key role in addressing elder
financial exploitation due to the
31 U.S.C. § 5318(g)(3). The safe harbor is nature of the client relationship.
also addressed in the regulations. For Often, financial institutions are
example, the OCC regulation states the quick to suspect elder financial
following: exploitation based on bank
personnel familiarity with their
A national bank and any elderly customers. The valuable
director, officer, employee or role financial institutions can
agent of a national bank that play in alerting appropriate
makes a voluntary disclosure authorities to suspected elder
of any possible violation of financial exploitation has
law or regulation to a received increased attention at
government agency or makes the state level; this focus is
consistent with an upward trend
a disclosure pursuant to this
at the federal level in Suspicious
section or any other Activity Reports (SARs)
authority, including a describing instances of
disclosure made jointly with suspected elder financial
another financial institution, exploitation. Analysis of SARs
shall be protected from reporting elder financial
liability to any person for any exploitation can provide critical
such disclosure, or for failure information about specific

frauds and potential trends, and file a Suspicious Activity
can highlight abuses perpetrated Report.
against the elderly.
Financial institutions shall file
…. with FinCEN to the extent and
in the manner required a report
Older Americans hold a high of any suspicious transaction
concentration of wealth as relevant to a possible violation
compared to the general of law or regulation. A financial
population. In the instances institution may also file with
where elderly individuals FinCEN a Suspicious Activity
experience declining cognitive Report with respect to any
or physical abilities, they may suspicious transaction that it
find themselves more reliant believes is relevant to the
on specific individuals for possible violation of any law or
their physical well-being, regulation but whose reporting
is not required by FinCEN
financial management, and
regulations. See, e.g., 31 CFR §
social interaction. While
103.18(a) (future 31 CFR §
anyone can be a victim of a 1020.320(a)).
financial crime such as identity
theft, embezzlement, and In order to assist law
fraudulent schemes, certain enforcement in its effort to
elderly individuals may be target instances of financial
particularly vulnerable. exploitation of the elderly,
FinCEN requests that financial
…. institutions select the
appropriate characterization of
SARs continue to be a valuable suspicious activity in the
avenue for financial institutions Suspicious Activity Information
to report elder financial section of the SAR form and
exploitation. Consistent with the include the term “elder financial
standard for reporting exploitation” in the narrative
suspicious activity as provided portion of all relevant SARs
for in 31 CFR Part 103 (future filed. The narrative should also
31 CFR Chapter X), if a include an explanation of why
financial institution knows, the institution knows, suspects,
suspects, or has reason to or has reason to suspect that the
suspect that a transaction has no activity is suspicious. It is
business or apparent lawful important to note that the
purpose or is not the sort in potential victim of elder
which the particular customer financial exploitation should not
would normally be expected to be reported as the subject of the
engage, and the financial SAR. Rather, all available
institution knows of no information on the victim
reasonable explanation for the should be included in the
transaction after examining the narrative portion of the SAR.
available facts, including the
background and possible Elder abuse, including financial
purpose of the transaction, the exploitation, is generally
financial institution should then reported and investigated at the

local level, with Adult with expected behavior. In
Protective Services, District addition, financial institutions
Attorney’s offices, sheriff’s may become aware of such
offices, and police departments scams through their direct
taking key roles. We emphasize interactions with elderly
that filers should continue to customers who are being
report all forms of elder abuse financially exploited. In many
according to institutional cases, branch personnel
policies and the requirements of familiarity with specific victim
state and local laws and customers may lead to
regulations, where applicable. identification of anomalous
Financial institutions may wish activity that could alert bank
to consider how their AML personnel to initiate a review of
programs can complement their the customer activity.
policies on reporting elder
financial exploitation at the • Erratic or unusual banking
local and state level. transactions, or changes in
banking patterns:
Financial institutions with
questions or comments * Frequent large
regarding this Advisory should withdrawals, including
contact FinCEN’s Regulatory daily maximum
Helpline at 800-949-2732. currency withdrawals
from an ATM;
The alert also identified certain red flags to
assist financial institutions on identifying * Sudden Non-
financial exploitation and abuse: Sufficient Fund activity;
The following red flags could * Uncharacteristic

indicate the existence of elder nonpayment for
financial exploitation. This list services, which may
of red flags identifies only indicate a loss of funds
possible signs of illicit activity. or access to funds;
Financial institutions should
evaluate indicators of potential * Debit transactions that
financial exploitation in are inconsistent for the
combination with other red flags elder;
and expected transaction
activity being conducted by or * Uncharacteristic
on behalf of the elder. attempts to wire large
Additional investigation and sums of money;
analysis may be necessary to
determine if the activity is * Closing of CDs or
suspicious. accounts without regard
to penalties.
Financial institutions may
become aware of persons or • Interactions with customers or
entities perpetrating illicit caregivers:
activity against the elderly
through monitoring transaction * A caregiver or other
activity that is not consistent individual shows

excessive interest in the * The elderly customer
elder’s finances or lacks knowledge about
assets, does not allow his or her financial
the elder to speak for status, or shows a
himself, or is reluctant sudden reluctance to
to leave the elder’s side discuss financial
during conversations; matters.
* The elder shows an V. CRIMINAL STATUTES

unusual degree of fear
or submissiveness There are several criminal statutes that implicate
toward a caregiver, or fiduciary activities in Texas that are not well-
expresses a fear of known: misappropriation of fiduciary property
eviction or nursing and financial exploitation of the elderly.
home placement if Though these may be similar in some ways to a
money is not given to a theft charge, they are different criminal charges.
caretaker; Rhinehardt v. State, No. 08-01-00335-CR, 2003
Tex. App. LEXIS 6223 (Tex. App.—El Paso
* The financial July 17, 2003, no pet.).
institution is unable to
speak directly with the A. Misapplication Of Fiduciary Property
elder, despite repeated
attempts to contact him Misapplication of fiduciary property or property
or her; of a financial institution is a charge that has been
in existence in Texas for over forty years. Tex.
* A new caretaker, Pen. Code Ann. § 32.45. A person commits the
relative, or friend offense of misapplication of fiduciary property
suddenly begins by intentionally, knowingly, or recklessly
conducting financial misapplying property he holds as a fiduciary in a
transactions on behalf manner that involves substantial risk of loss to
of the elder without the owner of the property. Id. at § 32.45(b).
proper documentation; “Substantial risk of loss” means a real possibility
of loss; the possibility need not rise to the level
* The customer moves of a substantial certainty, but the risk of loss
away from existing does have to be at least more likely than not.
relationships and Coleman v. State, 131 S.W.3d 303 (Tex. App.—
toward new associations Corpus Christi 2004, pet. ref’d).
with other “friends” or
strangers; The statute defines “Fiduciary” to include: “(A)
a trustee, guardian, administrator, executor,
* The elderly conservator, and receiver; (B) an attorney in fact
individual’s financial or agent appointed under a durable power of
management changes attorney as provided by Chapter XII, Texas
suddenly, such as Probate Code; (C) any other person acting in a
through a change of fiduciary capacity, but not a commercial bailee
power of attorney to a unless the commercial bailee is a party in a
different family motor fuel sales agreement with a distributor or
member or a new supplier, as those terms are defined by Section
individual; 162.001, Tax Code; and (D) an officer, manager,
employee, or agent carrying on fiduciary

functions on behalf of a fiduciary.” Id. at § This criminal charge arises in the context of
32.45(a)(1). trustees misapplying trust property. Bowen v.
State, 374 S.W.3d 427 (Tex. Crim. App. 2012);
The phrase “acting in a fiduciary capacity” is not Kaufman v. State, No. 13-06-00653-CR, 2008
defined in the code, but the Texas Court of Tex. App. LEXIS 3880 (Tex. App.—Corpus
Criminal Appeals has construed the undefined Christi May 29, 2008, pet. dism.). It also arises
phrase according to its plain meaning and in joint bank accounts situations and the use of
normal usage to apply to anyone acting in a funds therein. Bailey v. State, No. 03-02-00622-
fiduciary capacity of trust. Coplin v. State, 585 CR, 2003 Tex. App. LEXIS 10140 (Tex. App.—
S.W.2d 734, 735 (Tex. Crim. App. 1979). Based Austin Dec. 4, 2003, pet. ref’d). It also arises
on the plain and ordinary meaning of the word when a power of attorney holder makes gifts to
“fiduciary” as “holding, held, or founded in trust himself or herself. Natho v. State, No. 03-11-
or confidence,” one court has held that a person 00498-CR, 2014 Tex. App. LEXIS 1427 (Tex.
acts in a fiduciary capacity within the context of App.—Austin Feb. 6 2014, pet. ref’d); Tyler v.
section 32.45 “when the business which he State, 137 S.W.3d 261, 2004 Tex. App. LEXIS
transacts, or the money or property which he 3446 (Tex. App.—Houston [1st Dist.] 2004, no
handles, is not his or for his own benefit, but for pet.). This can also apply in business contexts,
the benefit of another person as to whom he where a business partner improperly diverts
stands in a relation implying and necessitating funds for personal use. Bender v. State, No. 03-
great confidence and trust on the one part and a 09-00652-CR, 2011 Tex. App. LEXIS 3096
high degree of good faith on the other part.” (Tex. App.—Austin Apr. 19 2011, no pet.);
Gonzalez v. State, 954 S.W.2d 98, 103 (Tex. Martinez v. State, No. 05-02-01839-CR, 2003
App.—San Antonio 1997, no pet.); see also Tex. App. LEXIS 9963 (Tex. App.—Dallas
Konkel v. Otwell, 65 S.W.3d 183 (Tex. App.— Nov. 21, 2003, pet. ref’d). Attorneys can be
Eastland 2001, no pet.). Moreover, evidence that charged for misapplying clients’ funds. Sabel v.
a defendant aided another person in misapplying State, No. 04-00-00469-CR, 2001 Tex. App.
trust property sufficed, under the law of parties LEXIS 6493 (Tex. App.—San Antonio Sept. 26,
as set forth in Texas Penal Code sections 2001, no pet.). It also arises where a defendant
7.01(a), 7.02(a)(2), to convict a defendant of misapplies royalty owners’ money contrary to a
misapplication of fiduciary property although gas lease agreement. Coleman v. State, 131
the defendant did not personally handle the S.W.3d 303, 2004 Tex. App. LEXIS 2093 (Tex.
misapplied funds. Head v. State, 299 S.W.3d App.—Corpus Christi 2004, pet. ref’d). It also
414 (Tex. App.—Houston [14th Dist.] 2009, pet. arises in the abuse of guardianship relationships.
ref’d). Latham v. State, No. 14-04-00248-CR, No. 14-
04-00249-CR, No. 14-04-00250-CR, 2005 Tex.
An offense under this statute ranges from a App. LEXIS 6560 (Tex. App.—Houston [14th
Class C misdemeanor if the property is less than Dist.] Aug. 18, 2005, no pet.). Of course, the
$100 to a first degree felony if the property charge can apply in many other instances as
misapplied is over $300,000. Tex. Penal Code well.
Ann. § 32.45(c). Moreover, the punishment is
increased to the next higher category if it is B. Financial Exploitation Of The Elderly
shown that the offense was committed against an
elderly individual. Id. at § 32.45(d). For Financial exploitation of the elderly is a criminal
example, a court affirmed a sentence of 23 years offense in Texas that has been in the statutes
for a conviction of this crime, and held that such since 2011. Tex. Pen. Code Ann. § 32.53. “A
was no cruel and unusual punishment. Holt v. person commits an offense if the person
State, No. 12-12-00337-CR, 2013 Tex. App. intentionally, knowingly, or recklessly causes
LEXIS 8393 (Tex. App.—Tyler July 10 2013, the exploitation of a child, elderly individual, or
no pet.). disabled individual.” Id. at § 32.53(b).
“Exploitation” means the illegal or improper use
of a child, elderly individual, or disabled

individual or of the resources of a child, elderly App. LEXIS 1427 (Tex. App.—Austin Feb. 6
individual, or disabled individual for monetary 2014, pet. ref’d) (criminal charge affirmed) with
or personal benefit, profit, or gain. Id. at § Natho v. Shelton, No. 03-11-00661-CV, 2014
32.53(a)(2). A “child” means a person 14 years Tex. App. LEXIS 5842 (Tex. App.—Austin
of age or younger, and an “elderly individual” May 30, 2014, no pet.) (affirming civil judgment
means a person 65 years of age or older. Id. at § in part based on same acts of fiduciary breach).
22.04(c). A “disabled individual” means a Moreover, there are civil claims for conversion,
person: (A) with one or more of the following: fraud, breach of contract, money had and
(i) autism spectrum disorder, as defined by received, undue influence, mental incompetence,
Section 1355.001, Insurance Code; (ii) constructive trust, etc. that may provide the
developmental disability, as defined by Section appropriate relief.
112.042, Human Resources Code; (iii)
intellectual disability, as defined by Section D. Courts Can Award Restitution In A
591.003, Health and Safety Code; (iv) severe Criminal Case
emotional disturbance, as defined by Section
261.001, Family Code; or (v) traumatic brain Even if a party cannot assert a civil claim under
injury, as defined by Section 92.001, Health and a criminal statute, a criminal court has discretion
Safety Code; or (B) who otherwise by reason of to award a victim restitution as against the
age or physical or mental disease, defect, or criminal defendant. Jones v. State, 2012 Tex.
injury is substantially unable to protect the App. LEXIS 10549 (Tex. App.—Corpus Christi
person’s self from harm or to provide food, Dec. 20 2012, pet. ref’d). “Restitution was
shelter, or medical care for the person’s self. Id. intended to ‘adequately compensate the victim
This offense is a felony of the third degree. Id. at of the offense’ in the course of punishing the
§ 32.53(c). criminal offender.” Cabla v. State, 6 S.W.3d
543, 545 (Tex. Crim. App. 1999) (quoting Tex.
C. Criminal Statutes Do Not Create Civil Code Crim. Proc. Ann. art. 42.12 § 9(a)). A
Liability sentencing court may order a defendant to make
restitution to any victim of the offense. Tex.
These criminal statutes do not create civil causes Code Crim. Proc. Ann. art. 42.037(a). “[T]he
of action. “The Texas Penal Code does not amount of a restitution order is limited to only
create private causes of action,” and as a result, the losses or expenses that the victim or victims
criminal code “allegations fail to state a viable proved they suffered as a result of the offense
claim for relief.” Spurlock v. Johnson, 94 for which the defendant was convicted.” Cabla,
S.W.3d 655, 658 (Tex. App.—San Antonio 6 S.W.3d at 546. “An abuse of discretion by the
2002, no pet.); see also Macias v. Tex. Dep’t of trial court in setting the amount of restitution
Crim. Justice Parole Div., No. 03-07-00033-CV, will implicate due-process considerations.”
2007 Tex. App. LEXIS 6798 (Tex. App.— Campbell v. State, 5 S.W.3d 693, 696 (Tex.
Austin August 21, 2007, no et.). Other states Crim. App. 1999). Due process places four
have adopted express civil causes of action for limitations on the restitution a trial court may
the exploitation of the elderly or other order. First, “[t]he amount of restitution must be
vulnerable persons. See, e.g., Ariz. Rev. Stat. § just, and it must have a factual basis within the
46-456, et. seq.; CA Welf. & Inst. Code § loss of the victim.” Id. Second, “[a] trial court
15610-1561-.65; Fla. Ann. Stat. § may not order restitution for an offense for
415.102(8)(a)(1) and (2); (8)(b). In Texas, there which the defendant is not criminally
are no such statutory or common law claims for responsible.” Id. at 697. Third, “a trial court may
exploitation of vulnerable persons. However, not order restitution to any but the victim or
there is a common law claim for breach of victims of the offense with which the offender is
fiduciary duty, and the same conduct that may charged.” Id. Fourth, a trial court may not,
justify a criminal charge may also support a “without the agreement of the defendant, order
valid breach of fiduciary duty claim. Compare restitution to other victims unless their losses
Natho v. State, No. 03-11-00498-CR, 2014 Tex. have been adjudicated.” Id. The standard of

proof for determining restitution is a
preponderance of evidence. Tex. Code Crim.
Proc. Ann. art. 42.037(k). The burden of proving
the amount of loss sustained by the victim is on
the prosecution. Id. The restitution ordered must
be “just” and must be supported by sufficient
factual evidence in the record.
VI. CONCLUSION
The use of durable power of attorney documents

is increasing. The new statutory changes were
implemented as a way to encourage the use of
durable power of attorney documents to avoid
guardianship proceedings. Estate planning
attorneys are using these as tools more and more
often. Accordingly, financial institutions must
know what power of attorney agents can do and
cannot do and know the rights that an institution
has when presented with such a document.
Further, as the baby boomer generation ages and
that generation’s wealth begins to transfer to the
next generation, individuals will take illegal and
immoral actions to obtain that wealth. The
government has placed the financial services
industry in the position of a watch dog to alert
authorities to financial exploitation. The author
has also attempted to describe the various
statutes and other authorities that describe
financial institutions’ duties to report these
incidences.

Practical Issues Concerning POA Transactions

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Practical Issues Concerning

Durable Power of Attorney Transactions

Represented trustees regarding claims of mismanagement of assets;

Represented a trustee regarding dispute over the failure to make distributions;

II. THE DURABLE POWER OF ATTORNEY ACT ......................................................................... 1

B. Application of Statute ......................................................................................................... 2

C. Definition of Durable Power of Attorney ........................................................................... 2

D. Agent’s Acceptance of Duties ............................................................................................ 3

E. Effect of Court-Appointed Guardian of the Estate ............................................................. 3

F. Effect of Bankruptcy ........................................................................................................... 3

G. Agent’s Right to Reimbursement and Compensation ......................................................... 3

H. Powers Of Attorneys From Other Jurisdictions .................................................................. 3

J. Agent’s Powers ................................................................................................................... 4

1. Grants of Authority ................................................................................................ 4

2. Limitations on General Authority .......................................................................... 5

3. Statutory DPOA Form ........................................................................................... 6

4. Construction of DPOA In General......................................................................... 6

5. General Power For Real Estate Transactions......................................................... 7

6. General Power Over Tangible Personal Property .................................................. 9

8. General Power Over Banking and Other Financial Institution Transactions....... 11

9. General Power Over Business Operation Transactions ....................................... 12

10. General Power of Insurance and Annuity Transactions....................................... 13

12. General Power Over Claims and Litigation ......................................................... 15

13. General Power Over Personal and Family Maintenance ..................................... 16

15. Power Over Retirement Plan Transactions .......................................................... 17

16. Power Over Tax Matters ...................................................................................... 18

17. Power to Create or Change Beneficiary Designations ......................................... 19

K. Agent’s Duties .................................................................................................................. 20

L. Persons Now Generally Required To Accept Power Of Attorney Documents

M. Timeline Considerations ................................................................................................... 22

Q. Physician’s Written Statement .......................................................................................... 24

R. Opinion Of Counsel .......................................................................................................... 25

S. English Translation ........................................................................................................... 25

T. Person Accepting Power Of Attorney Has Defenses ........................................................ 26

V. Grounds For Refusing Acceptance ................................................................................... 28

W. Party Refusing A Power Of Attorney Must Give A Timely Response............................. 30

Y. Cause Of Action For Wrongfully Refusing Power Of Attorney ...................................... 31

Z. Person May Bring Suit To Construe Power Of Attorney ................................................. 31

AA. Agent Can Change Rights of Survivorship And Beneficiary Designations If

1. Power To Create Or Modify Survivorship And Beneficiary Rights .................... 32

2. Agent’s Gifting Powers ....................................................................................... 33

3. Duty To Preserve Principal’s Estate Plan ............................................................ 33

4. Concern With New Provisions Broadening Agent’s Authority ........................... 33

III. EXPLOITATION OF VULNERABLE PERSONS STATUTE.................................................... 38

B. Definitions Of Vulnerable Person And Financial Exploitation ........................................ 38

1. Employee Reporting Obligation .......................................................................... 39

2. Financial Institution Reporting Obligation .......................................................... 39

3. Who Are “Account Holders”? ............................................................................. 39

4. Financial Institution’s Ability To Place A Hold On Transactions ....................... 40

5. Duty To Create Policies ....................................................................................... 40

D. Securities Dealers and Financial Advisers ........................................................................ 41

1. Professionals’ Duties To Report. ......................................................................... 41

2. Dealer’s/Investment Adviser’s Duty To Report .................................................. 41

3. Duty To Create Policies ....................................................................................... 41

4. Ability To Place Hold On Transactions ............................................................... 41

E. Other Reporting Duties ..................................................................................................... 42

F. Application of U.C.C. Section 3.307 To Notice Of Financial Exploitation ..................... 43

G. New Provisions Application To Aiding And Abetting Breach Of Fiduciary Duty,