A Durable Power of Attorney is a powerful estate planning tool used to ensure that someone may act on your behalf in the event of incapacity – but how do you make sure that your financial institutions will honor it?
Many banks carefully scrutinize Power of Attorney documents, and rightfully so. But there have been many cases in which a bank refused to accept a Power of Attorney involving one of their customers. In fact, a recent Florida ruling awarded a gentleman $64,000 after his father’s bank refused to release funds to him from a joint account of his father even though he had a valid Durable Power of Attorney document. At that point, a friend of his father’s, who was also listed on the account, withdrew the funds from the account. The bank was ordered to repay the funds to the gentleman as the jury found they should have honored the legal document.
Careful planning may have avoided this situation. Banks are trying to protect their customers’ interests as well as their own. They are concerned they may be sued if the Power of Attorney document is found to be invalid or fraudulent. To prevent this situation, contact your financial institution when your Power of Attorney is executed and ask what is needed to ensure the document is accepted. Some companies may have a standard form to complete, and while it may not be legally necessary, it can make it easier for your agent should the Power of Attorney be needed later, so it makes sense to complete the form in addition to the Power of Attorney document prepared by your attorney.
In addition, may financial institutions and title companies (necessary if you need to sell or refinance real estate) will not accept a Power of Attorney once more than a year has passed. I recently heard of a title company that refuses to honor any Power of Attorney that was executed more than six months prior. Thus, if you’re relying on a Power of Attorney rather than a Living Trust to get through a period of disability, it is safest to execute a new Power of Attorney no less than once a year.
To make sure your estate planning documents are legal, valid documents, work with an estate planning attorney to ensure that not only will they be acceptable when they are needed, but that they meet your needs and goals.