A durable power of attorney – where an agent is appointed to handle the financial affairs for someone who can no longer make such decisions for themselves (known as a principal) – has been used for decades. Years ago, these documents were rarely ever challenged or exploited. Unfortunately with the rise of elder abuse, banks and other financial institutions have started rejecting valid durable powers of attorney for fear of being held liable. Without the ability to transact business for the principal, a durable power of attorney is effectively worthless. While there is no guarantee that a financial institution will honor a durable power of attorney, here are some steps to take to help avoid such an issue:
Keep it current:
The most common reason a durable power of attorney is rejected is because it was executed years ago. At a minimum, a durable power of attorney should be renewed every three years.
Check with your bank:
Find out if your bank or other financial firms have their own rules to make sure your durable power of attorney complies. Or, if they require the use of their own durable power of attorney, be sure to sign it and have it kept on file with the financial institution.
Empower your agent:
Banks primarily reject durable powers of attorney out of fear of liability. To help avoid this issue, your durable power of attorney should include language that waives any liability to third parties for relying upon an agent’s representations.
Copies will suffice:
Due to age or disability, it is sometimes difficult for a principal to sign a number of originals. Therefore, the durable power of attorney should specifically state that copies are as acceptable as an original.
Call your lawyer:
When a bank employee refuses to honor a durable power of attorney, the employee is often just a messenger with limited understanding of a durable power of attorney. It is not uncommon after communication with the bank’s legal department, for the durable power of attorney to be subsequently accepted.
While durable powers of attorney are extremely valuable, they are not without potential issues. To help avoid having your agent run into some unforeseen roadblocks, be sure to consult with an experienced elder law attorney.