Powers of Attorney, the most common of estate planning tools, are parceled out by estate planning attorneys like aspirin, but they seldom work when needed. Here’s why –
Generic Powers of Attorney will work very well for a large variety of purposes that are seldom encountered, but they usually won’t work well in the most commonly needed situations.
Powers of Attorney are designed to transfer authority to a trusted Agent to deal with a Principal’s assets at critical times when the Principal is unavailable. However, more and more banks refuse to accept a Power of Attorney for a variety of reasons. A common reason is that the power of attorney is “stale” which used to mean too old, but now that is usually interpreted by banks to mean more than 6 months old. Most national and regional banks require the power of attorney to be on the bank’s own form and recently updated – a concept contrary to the intended purpose of a general durable power.
Whatever the reason, the result is the same, at the critical time when the Agent must act, the bank won’t allow it and the family must pursue more expensive alternatives to achieve the intended purpose of having the Principal’s cash available during the stressful time.
I believe the bank’s refusal to act often arises because the bank employee is either too inexperienced to understand the legal impact of the document they are given or too disinterested in helping their customer do something that is beyond the employee’s knowledge or experience. Occasionally, the bank employee will call their legal department and get advice from someone just as inexperienced, ignorant of local laws and customs, or too busy to help.
However, I also believe the bank’s come by their policy honestly. Unlike California, Arizona has no law that imposes a duty to accept a power of attorney and a financial penalty if a third party refuses to act upon a proper power of attorney that causes financial damage to the Principal.
As a result of all these issues, I know I can do a better job of preparing my clients for emergencies by valuable and effective counseling rather than prescribing power of attorney placebos that won’t be effective when the crisis arises.
Making sure that I am providing my clients legal advice that works is a fundamental philosophy of my practice. If you want to be prepared in case of a life crisis or just the normal advanced aging process, call me. I’ll provide you with documents that work and teach you how to implement a successful and anxiety reducing strategy that balances your personal relationships, your intentions, and your needs.
Next time I will blog about the problems with health care powers of attorney and why statutory or internet forms are usually deficient.