Whenever my office drafts a General Durable Power of Attorney for a client, the first thing we tell them is put it on file with all the financial institutions they deal with. Why, you might ask, I certainly don’t want my agent acting for me now! The problem arises however, when your agent does need the document to be effective. They present a perfectly witnessed and notarized legal document to a financial institution and the financial institution does not accept it – they insist that the account owners sign the institution’s own power of attorney form.
When helping an older relative consolidate his or her accounts, you run into this roadblock. The local bank wouldn't speak with you despite your power of attorney which they claim they require on their form. In the meantime, the relative has developed dementia and does not have the capacity to sign legal documents.
This is not a rare occurrence. Elder law attorneys often encounter financial institutions unwilling to honor valid powers of attorney. Even when state statutes require banks to accept a durable power of attorney, even waiving the bank's liability when they do accept it, I have seen some banks resist. How fast can you say: Bank of America?
Financial industry executives have not given any estimates of how many financial institutions insist on their own power of attorney forms. Banks argue that they hold important assets and need to be careful when someone is asking for access to a customer's account. Granted, that is a valid concern. Government agencies and advocacy groups warn us about the financial exploitation of seniors, particularly those with cognitive impairment.
But the banks also have other motives. When they're insist on their own forms, what they are really concerned about is their own liability. What can you do? If it is too late to fill out ‘their form’, I try to assist my clients by going over the local managers' heads by speaking directly with their bosses. However, the best solution is the one I have already provided. Make sure you are proactive by immediately asking the financial institution if they will honor the Power of Attorney you just signed or whether they will require that you submit their durable power of attorney form. That’s the secret to creating an estate plan that works; it’s all in the planning.
If the bank requires you to complete their form, read it carefully or better yet, have your estate planning attorney review it because these forms can have disadvantageous indemnity or arbitration clauses—or provisions that contradict the individual’s general power of attorney.
Call our office to schedule your complimentary consultation or register online for one of our educational seminars on topics of interest to you and your loved ones. Visit us at www.zarembalaw.com to view our revamped website that makes planning a breeze!
Reference: New York Times (May 6, 2016) "Finding Out Your Power of Attorney Is Powerless"