A durable power of attorney – where an agent is appointed to handle the financial affairs for 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:
1. Keep it current. The most common reason a durable power of attorney is rejected is because it was executed several years ago. At a minimum, a durable power of attorney should be renewed every three years.
2. Check with your financial firms. 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.
3. 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.