One of the most important elements of a solid estate plan is having a Durable Power of Attorney; this is a legal document you use to appoint someone of your choice to handle your financial and legal affairs if you are unable to. But not all institutions will accept these documents as valid, and you may not know ahead of time which institutions will honor your Power of Attorney and which ones won’t.
The main reason that some banks and other types of institutions won’t honor a Power of Attorney is because they are concerned that they will be liable for any losses if the document is not authentic and legal, or if you have revoked the person’s power of attorney without informing them. It is also possible that you could incur losses if the person exceeds the power that the document gives them.
Although the institution may be liable for your losses if it improperly accepts a Power of Attorney, at the same time the institution can also be liable for any losses that you suffer as a result of its refusal to honor a valid Power of Attorney without reasonable cause.
Fortunately if you are working with an estate-planning attorney he or she can advise you on steps that you can take that will help to increase the likelihood that the institutions you deal with will accept your Power of Attorney. Some of the basic steps that will help reduce the risk of problems with your Power of Attorney include:
- Providing your appointed agent with a General Power of Attorney. This will help reduce the risk that the person will exceed the power that is granted to them by the document.
- If you prefer to grant your appointed agent only limited authority, make sure your Power of Attorney is very specific about what actions your agent can take.
- If your Power of Attorney appoints more than one person to act as your agent, you will want to specify that these people can act alone if you want your agents to have this power.
- Make sure that you keep an original signed document; many institutions want to see an original and not a copy.
- You will want to sign a new Power of Attorney document every few years; the institution will be more comfortable with a document that is only a couple years old instead of decades old.
- If you financial institution has its own Power of Attorney document, take the extra time to sign this as well.