For millions of people over the decades, the power of attorney has been an inexpensive way to give someone the right to act on another person’s behalf. But its power is not always absolute and when it fails, the consequences can be nothing short of disastrous.
Maybe your power of attorney isn’t so powerful after all. Well, at least not in some instances.
General Durable Powers of Attorney are an important part of almost all estate plans. They provide a cheap and effective way for someone to designate a person to handle financial matters in the event of incapacitation due to an accident or old age. The New York Times reports in “Power of Attorney Is Not Always a Solution“ that the very popularity of powers of attorney has led to an increasing difficulty in getting financial institutions to accept them. The problem is that powers of attorney can also be used to commit elder abuse and fraud. Banks do not want to get sued and as a consequence will refuse any power of attorney that is irregular. The New York Times article tells the story of a woman who went by her middle name but the document her brother signed giving her power of attorney used her first name. Banks were not willing to accept that she was the same person named in the power of attorney without hassle.
The article suggests that banks are more willing to accept revocable trust documents. Whether or not that is true depends on individual banks. Certainly banks will not refuse every power of attorney. An important takeaway, however, is to make sure that everything in your general durable power of attorney is accurate. For example, the person given the power should be named in the same way that he or she is on a government-issued ID. Talk to an estate planning attorney about ways to make your power of attorney more likely to be accepted and whether a trust might be a better option for you.
Reference: The New York Times (August 22, 2014) “Power of Attorney Is Not Always a Solution“
