Can You Foolproof Your Power of Attorney?
October 18, 2010
“The best laid plans of mice and men often go awry.” Although we hate to admit it, this statement will also sometimes apply to estate planning; and more often than we would like, it happens with powers of attorney.
A power of attorney is the document in which you nominate an agent (or attorney-in-fact) to make financial decisions and take legal action for you when you are incapacitated or otherwise unable. (This does not include healthcare decisions, covered in another document called a health care directive.) Unfortunately, depositors sometimes experience difficulty in getting banks or other financial institutions to recognize the authority of an agent under a power of attorney.
This difficulty usually has nothing to do with the validity of the document; rather, it is the bank’s attempt to protect itself. But while a little bit of caution is understandable, it can have frustrating—or even tragic—results if not addressed. Luckily, there are steps you can take to improve your chances of having the bank honor the powers you have delegated to your Agent. Here are a number of suggestions:
- Talk to your bank about your plans ahead of time.
- Sign the bank’s own forms in addition to the more comprehensive one prepared by your attorney.
- Ask your financial institutions if they have any requirement for powers of attorney.
- Update your power of attorney forms or documents frequently (every 2-5 years.)
Talking to a representative from your bank every 2-5 years may seem like an inconvenience now, but imagine the inconvenience if you are incapacitated and your agent is unable to access the funds he or she needs to pay your bills, make your mortgage payment, or provide for the needs of your family. A little bit of time spent now can save a mountain of stress later on. If all else fails, you might need your attorney to remind the bank that California laws imposes monetary penalties upon banks and others who refuse to honor valid powers of attorney; the threat of legal action from a credible source will often solve the problem.
How Well Do You Know Your Power of Attorney?
May 29, 2009
Imagine for a moment that you (or you and your spouse) are in a car accident, knocked on the head, and suffer brain injuries great enough to put you into a coma for 2 weeks and require a full seven months of nursing and rehabilitative care. Thankfully, you make a full recovery of all your cognitive powers; but in the meantime, who has been taking care of all of your responsibilities? Have you lost your home because nobody was paying the bills? Did you end up in a sub-standard recovery facility because nobody could sign the nursing home contract on your behalf? Do you have a living trust that addresses this situation but was never brought into play because it languished in a safe deposit box to which nobody had access but you?
An essential part of any trust or estate plan is the execution of a Durable Power of Attorney. This is the document that gives your nominated agent the power to do all of the things you would normally do: sign legal documents, write checks, access safe deposit boxes, and more. A Power of Attorney—if it’s done right—is an extremely comprehensive document (as described in this article in the New York Times), and as such can make many clients nervous about signing it. Does this mean you should go without? Absolutely not! Note: the Times’ article is based upon New York law, but it does have a message for all:
“…Even if signing a power of attorney makes the client feel vulnerable, it’s far better than living without one. If you become incompetent, you lack the capacity to make legally binding commitments. Without a durable power of attorney, your family might have no choice but to ask a court to appoint a guardian to oversee your finances. This can be an expensive and sometimes embarrassing ordeal and can involve unpleasant, even acrimonious, exchanges.”
Trusting another person with such power may be difficult, but the alternative can be far worse. Executing a power of attorney doesn’t have to be a nerve-wracking ordeal; talk to your lawyer about your concerns, work with him or her to choose an agent with whom you feel comfortable, and discuss the circumstances in which a power of attorney might be necessary. The last thing you want is for your home and finances to deteriorate because you were out of commission for a couple of months, and this is exactly what a power of attorney is designed to prevent. And remember: in California, it should be designated as “durable” , which means it survives your incapacity, as that is when you will need it most. If it is not created to be ‘durable’, your agent may have difficulty using it just when it is most needed, and its primary purpose will have been lost.
Jinies.com