A durable power of attorney (POA) is an important part of every estate plan that gives an appointed agent the right to act on behalf of another in making financial decisions. The agent typically steps in to make decisions when their loved one is no longer capable of making decisions on their own. Unfortunately, when access to money is involved, abuse and fraud is soon can follow. As stated in a Wall Street Journal article titled, “When the Power of Attorney Lacks Power” many banks have been reluctant to accept powers of attorney due to potential liability for fraud.
Many agents have gone into banks expecting to be able to use a power of attorney on behalf of an incapacitated loved one only to be told they are not allowed. This puts agents in a difficult situation, especially when a loved one is incapacitated and cannot make changes to the POA so that the bank will accept it. Agents may have no other option but to file for conservatorship which can be time can be expensive and time consuming.
The first step to avoiding an expensive court case is to find out what kind of power of attorney your loved one has. A typical durable power of attorney gives the agent the authority to act immediately after the document is signed. This means the agent can help pay bills or make runs to the bank even though their loved one is not incapacitated. A springing power of attorney, however, doesn’t give the agent authority until the executor is declared incapacitated. While a springing power of attorney may sound ideal, it can create unforeseen legal complications. For example, in order to use a springing power of attorney at least two physicians must certify that the executor is incapacitated which some doctors may be unwilling to sign.
Once you know when you have authority under a power of attorney, it is important to check with your banking institution before a time of crises. It is recommended that right after drafting the power of attorney you take it into the bank and make sure it will be accepted. For example, many banks may require a special form to be signed along with the power of attorney. If a bank refuses to accept the power of attorney, see if any possible modifications could help. Otherwise, you may consider moving any assets to another bank that will accept the POA. Different banks have different policies which makes it pertinent to check with your local branch.