However, The New York Times explains in "Finding Out Your Power of Attorney Is Powerless" that when you take the witnessed and notarized document to a financial institution, the officials there may not accept the documents. They may not honor your power of attorney and may insist that the account owners sign the institution’s own power of attorney form.
Sometimes when a person is helping an older relative consolidate his or her accounts, the individual will run into this roadblock. The local bank will not accept the out-of-state power of attorney that the relative had signed three years earlier, when this individual sold his or her house. The bank has its own more detailed state form. In the meantime, the relative has developed dementia.
This is not a rare occurrence. Estate planning attorneys often encounter financial institutions unwilling to honor valid powers of attorney. Even when state statutes require banks to accept a durable power of attorney, or waive their liability when they do accept it, estate planning attorneys have seen some banks resist.
Financial industry executives have not given any estimates of how many banks and brokerages insist on their own power of attorney forms, but it is uncommon, they say. Nevertheless, banks argue that they hold important assets and need to be careful when someone is asking for access to a customer's account. This is a valid concern. Government agencies and advocacy groups warn us about the financial exploitation of seniors, particularly those with cognitive impairment.
Banks also have other motivations. When they're insisting on their own forms, they're concerned about liability.
What can you do? An estate planning attorney can help with banks and brokerages honoring valid powers of attorney by going above local managers to higher-ups. You can also be proactive by asking a brokerage or bank if it requires its own durable power of attorney document and, if it does, having your relatives sign it when they are still able to do so. Also, if your assets exceed $150,000, moving those assets into a Trust will eliminate the need to use the Power of Attorney and their are often less hassles with a Trust.
Nevertheless, read all bank forms carefully or have your estate planning attorney review them because these forms can have disadvantageous indemnity or arbitration clauses—or provisions that contradict the individual’s general power of attorney.
One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation. Call our office today to schedule a time for us to sit down and talk about your estate plan, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security. Our office is located in Santa Ana, CA but we serve all of California including Irvine, Orange, Tustin, Newport Beach, and Anaheim.
Reference: New York Times (May 6, 2016) "Finding Out Your Power of Attorney Is Powerless"