New Illinois Power of Attorney (POA) Law Clarifies Legal Duties and Protections

This article was initially published on the website for Michael V. Favia & Associates, P.C. on February 7, 2025, at https://bit.ly/ILPOARefusals

The Amended Illinois Power of Attorney Act Lists Reasonable and Unreasonable POA Refusal Criteria?

The Illinois Power of Attorney Act is amended, making it unlawful for a third party to unreasonably refuse to honor statutory short-form power of attorney documents properly executed in accordance with state law.?

Our laws are meant to protect us and prevent ambiguity in important situations including the rights, duties, and liabilities concerning the use of Power of Attorney (POA) documents in relevant and appropriate circumstances. There are documented situations in which the agent presents a POA for a legally temporarily unavailable principal, where individuals had questions and concerns about the validity of the POA, in this case, the statutory short form POA for property.?

Buying, selling, doing business, and facilitating transactions, there are plenty of times a principal has changed their POA agent, among family members and not communicated the change properly. Someone could present a POA, unknowingly one that is no longer valid and has been superseded by a newer document. These challenges were presented to the legislative body who processed updates in Illinois law to cure problems and concerns about POAs and related legal duties.?

For Estate Planning in Illinois, Protect Your Legacy with Michael V. Favia & Associates, P.C. in Chicago and Rolling Meadows?

For this article and illustrative purposes, consider this hypothetical that could be on a bar exam: Dad has an IL short-form property POA for Grandma’s money and he’s managing her investments and transactions because she set it up that way with the estate planning lawyer. A deal comes along where Dad can invest Grandma’s money in a deal that is good for Grandma. But when it comes to doing the deal, other partners protest accepting Dad’s check for Grandma’s investment in something one of the partners claims they know Grandma would never invest in, and Dad is excluded from the deal and sues. Interesting situations like this pop up in probate courts all over.?

About the Illinois Power of Attorney Act

The Illinois Power of Attorney Act (755 ILCS 45) controls the process for principals to name an agent and gives them the power to make decisions on their behalf for health care, property, personal, and financial matters, under specific circumstances. The Act also establishes the Illinois Short Form Power of Attorney for Property, which requires both principal and witnesses to sign before a notary public.?

Amendment to the Illinois Power of Attorney Act as Follows:?

Lists “Unreasonable Causes” for Refusing to Honor the IL Statutory Short Form POA

Third parties must “honor a statutory short form power of attorney properly executed in accordance with the laws in effect at the time of its execution,” unless the refusal is based on any one of the following conditions:?

1. “The power of attorney is not on a form the third party receiving such power prescribes regardless of any form the terms of any account agreement between the account holder and third party requires;?
2. There has been a lapse of time since the execution of the power of attorney;
3. On the face of the statutory short form power of attorney, there is a lipase of time between the date of acknowledgment of the signature of the principal and the date of the acceptance by the agent;?
4. The document provided does not bear an original signature, original witness, or original notarization but is accompanied by an attorney-certified copy; or?
5. The document appoints an entity as the agent.”

Lists “Reasonable Causes” for Refusing to Honor the IL Statutory Short Form POA

1. “The refusal by the agent to provide an affidavit or property executed Agent’s Certification and Acceptance of Authority, Successor Agent’s Certification and Acceptance of Authority, or Co-Agent’s Certification and Acceptance of Authority;
2. The refusal by the agent to provide a copy of the original document that is certified to be valid by an attorney, a court order, or a governmental entity;
3. The person’s good faith referral of the principal and the agent or a person acting for or with the agent to the local adult protective services unit;?
4. Actual knowledge or reasonable basis for believing in the existence of a report having been made by any person to the local adult protective services unit alleging physical or financial abuse, neglect, exploitation, or abandonment of the principal by the agent or a person acting for the agent;?
5. Actual knowledge of the principal’s death or a reasonable basis for believing the principal has died.?
6. Actual knowledge of the incapacity of the principal or a reasonable basis for believing the principal is incapacitated if the power of attorney tendered is a nondurable power of attorney;?
7. Actual knowledge or a reasonable basis for believing that the principal was incapacitated at the time the power of attorney was executed;?
8. Actual knowledge or a reasonable basis for believing: (A) the power of attorney was procured through fraud, duress, or undue influence, or (B) the agent is engaged in fraud or abuse of the principal;?
9. Actual notice of the termination or revocation of the power of attorney or a reasonable basis for believing that the power of attorney has been terminated or revoked;?
10. The refusal by a title insurance company to underwrite title insurance for a gift of real property made pursuant to a statutory short form power of attorney that does not contain express instructions or purposes of the principal with respect to gifts in paragraph 3 of the statutory short form power of attorney;
11. The refusal of the principal’s attorney to provide a certificate that the power of attorney is valid;?
12. A missing or incorrect signature, an invalid notarization, or an unacceptable power of attorney identification;
13. The third party: (A) has filed a suspicious activity report as described by 31 U.S.C. 5318(g) with respect to the principal or agent; (B) believes in good faith that the principal or agent has a prior criminal history involving financial crimes; or (C) has had a previous, unsatisfactory business relationship with the agent due to or resulting in material loss to the third party, financial mismanagement by the agent, or litigation between the third party and the agent alleging substantial damages; or?
14. The third party has reasonable cause to suspect the abuse, abandonment, neglect, or financial exploitation of the principal, if the principal is an eligible adult under the Adult Protective Services Act.”?

On Request Agents Must Furnish Properly Executed POA Documents

The amendments to the Illinois Power of Attorney Act, specifically identifying reasonable and unreasonable justifications for refusal to honor a POA, do not limit a third party from asking a purported agent of a principal to furnish proof with a properly executed document as follows:?

• Agent’s Certification and Acceptance of Authoirty (755 ILCS 45/2-8);
• Successor Agent’s Certification and Acceptance of Authority (755 ILCS 45/2-10.3); or
• Co-Agent’s Certification and Acceptance of Authoirty (755 ILCS 45/2-10.5).

Good Faith Reliance and Protection in Honoring POAs in Illinois?

People who act in good faith in relying on a copy of a POA have the same protection, had they been dealing with the principal directly, instead of their POA agent on their behalf. The issues arise in whether it is actually good faith reliance or whether something else may be going on.?

Duty on Agents to Provide POA Certification Upon Request?

The person presenting as an agent with authority to bind the principal, based on a POA, has to prove the validity of that authority by producing one of the aforementioned documents, or that third party may be in their right to dishonor that authority and stand in opposition to the agent’s conduct in attempting to facilitate transactions as an agent of the principal.?

Civil Penalties for Noncompliance Without Good Cause?

Without a reasonable cause to deny acceptance of a POA, the third party may be subject to civil penalties, and liabilities for damages. So before an individual turns away and willfully refuses to honor a duly executed Illinois short-form power of attorney document, they should consult legal counsel and be aware of their rights, duties, and liabilities under Illinois law and the Illinois Power of Attorney Act.?

Chicago Area Estate Planning Attorney Michael V. Favia Advises and Represents Individuals with Estate Planning and Litigation Questions and Issues?