Just about everyone knows the importance of having a Durable Power of Attorney (DPOA). This key legal document allows you to name someone other than yourself to handle your financial affairs. If you become incapacitated, having a DPOA can make the difference between having your attorney-in-fact smoothly handle your affairs, or your becoming the subject of a guardianship.
Unfortunately, "smoothly" is not how things always go in the real world, even if your DPOA has been drawn up by a competent estate planning attorney and every "t" has been crossed and "i" dotted. The reason: Financial institutions subject the document to rigorous scrutiny and are notoriously reluctant to honor them. Astonishing as it may seem, in Florida there is no one, universally accepted, statutory DPOA form. Therefore, banks and other financial institutions can be as picky as they want. They may tell an agent that the DPOA was signed too long ago and is "stale"; that the bank has its own form that also needs to be signed; that the form you are presenting to them lacks certain language, etc.
A recent article in The New York Times, "Finding Out Your Power of Attorney is Powerless," catalogs the frustrations some have experienced when trying to use a power of attorney at their financial institutions. In one instance, college professor Claire Ullman approached a bank in order to manage the accounts of an elderly relative who had named Ullman as her agent three years prior. The bank rejected the DPOA, and requested that a new one be signed - an impossible task because Ullman's relative was no longer mentally competent. "People sign these anticipating incapacity. Once incapacity arrives, it's too late to sign another one," Ullman says.
It is easy to conclude that making an attorney-in-fact jump through all sorts of hoops is madness. But from the banks' point of view, there is a method to the madness, given the widespread incidence of financial elder abuse. Statistics show that it is not uncommon for an older person to be victimized by his attorney-in-fact - the very person who is authorized to handle his finances. Therefore, banks increasingly err on the side of caution, hoping it will protect themselves from liability as well as their customers from fraud.
This is not to say that the durable power of attorney is useless. It is not. It is vital. Everyone needs one. But in this day and age, you have to take some additional steps after the ink is dry, in order to ensure that when the time comes your agent will be able to use the document as you intend:
- Make sure your DPOA is drafted by an experienced and competent Florida elder law/estate planning attorney. Do not rely on generic pre-printed or downloadable forms! Although there is no one statutory form in Florida, the state still requires that certain items be included and certain formalities followed.
- Once you've signed your DPOA, take it to your financial institution(s). Request that the legal department review it and provide you with written assurance that your agent will be allowed to use it in the future. If it is not acceptable to the bank, find out why and check back with your attorney. Your financial institution has the right to not accept it, but it is obligated to tell you why.
- Be cautious about any bank-generated form you are asked to sign. Some of those forms contain arbitration clauses and other language that may not be favorable to you.
- If you are a client of The Karp Law Firm, call us. We can engage with the bank's legal department and often, work it out for you. If the bank insists it will not accept your DPOA, withdraw your funds and take them to a more cooperative institution. In fact, just saying you're going to do this will frequently encourage a balky bank to acquiesce.
Another route many of our clients choose is setting up a living trust. In contrast to your attorney-in-fact whose authority stems from your Durable Power of Attorney, a co-trustee or successor trustee under your trust is far less likely to encounter roadblocks when managing your trust assets.
You can read the original New York Times article on this subject here.