Durable Powers of Attorney - What You Need to Know
A durable power of attorney - where an agent is appointed to handle the financial affairs for a principal - has been used for decades. Until recently, it was unusual for these documents to ever be 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 potential liability. 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, it is a good idea to renew a durable power of attorney every three years.
2. Do not name co-agents. Banks and other financial institutions often will reject durable powers of attorney that name co-agents particularly when each agent can act independently.
3. Check with your financial firms. Find out if your bank or other financial firms have their own rules or policies 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.
4. 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.
5. 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.
6. 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 durable powers 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.
This blog post is written by Brett A. Howell, Certified Elder Law Attorney. The blog is written as a service of The Elder and Estate Planning Law Firm, P.L.L.C. This information is for general informational purposes only and does not constitute legal advice. For a consultation to address specific questions, please call (810) 953-3846.