Wednesday, May 19, 2010

Using Your Power of Attorney

When you need to use a power of attorney, you need to know that the document will work, that it will be accepted to meet your need right at that time. If you “Google” the term “power of attorney”, you will see that very often now, there are problems.

A power of attorney or a durable power of attorney is one of the basic forms attorneys prepare in estate planning work. It is meant to allow one person (the “Agent”) to act for another (the “Principal”) if the Principal is disabled, or unavailable, or for some reason cannot take care of business matters for himself or herself. In some cases, the power is effective immediately and in others it becomes effective if a doctor certifies that the Principal is disabled. There are many variations.

The growing problem is getting a bank or investment advisor to accept your document. Some will and some will not. Even when they acknowledge that the documents are legal, that they are properly written and properly signed, many financial institutions will not accept your documents unless you comply with their individual requirements.

Some of the more common problems include:

-Refusing to accept a power that is not on their own form;

-Refusing to accept a power that is not immediately effective;

-Refusing to accept a power that names more than one person, acting either under a co-power or a successor in case the first person is not available;

-Requiring an affidavit on a regular basis stating that the power is still effective.

By the way, I am not being critical of these companies or their requirements. Please keep in mind that just because the company you are dealing with has some objection to the documents you present, it is not necessarily a bad company, and the documents we prepared are still proper. However, the company you are dealing with may have different rules due to problems they have experienced at other times.

Back to dealing with what you need to do in these situations. These are not problems without a solution. This is what I recommend.

Make a list of the banks, investment advisors and financial institutions you use and contact these companies now. Give your advisor a copy of your power to your and ask if they will accept it now and keep it on file. Ask if they require anything in addition to the power to make sure it is usable when needed. Ask if there is a time limit they will hold a power before a new document needs to be filed, or it needs to be verified as still active. If they say “yes”, get it in writing or at a minimum, get a written receipt or acknowledgement for the document.

Do not be surprised if you encounter obstacles dealing with the new requirements. They can be overcome, but it may take some effort. At times, the answer may be as simple as knowing that you need to use a form from that company for their individual transactions. At times it is as simple as preparing a separate power of attorney or series of powers allowing your Agent to work with that company. And do not sign a form document until it has been reviewed. Many power of attorney forms revoke or conflict with other similar documents and that may not be your intent.

You need to deal with these problems now, not when you need your Agent to use your power of attorney. This is one of the documents that normally will never be used for convenience and will only be used when you cannot help yourself.

1 comment:

Jeffrey Miller said...

Timely post! I was recently asked about a situation where someone had a POA for their elderly mother that a bank would not honor because it was written in such a way that, in order to become effective, it required two physicians to certify she was disabled. She had trouble with her vision and hearing and wanted the bank to honor the POA, but without the physician certification the bank would not agree to do so. Her needs had changed but her POA did not. These documents need to be reviewed and updated over time as circumstances change.