Assuring That Your Durable Power of Attorney Is Effective
One of the standard, and critical, documents in most clients' estate plans is a durable power of attorney for financial affairs. These powers of attorney enable the client's selected agent to manage his or her financial affairs in the event that the client should become incapacitated. A properly drafted power of attorney can be critical in enabling the client's family to avoid time consuming, and costly, court proceedings involving the client's financial affairs in the event of incapacity. Unfortunately, many financial institutions will often refuse to honor a power of attorney, even when the document was lawfully executed. Institutions will refuse to honor these agreements for a variety of reasons, including concerns as to whether the document was forged and whether it has been revoked or superseded by some other agreement. Not surprisingly, financial institutions are typically driven by a motivation to try and limit their own liability in these cases. Several years ago, Daniel Wentworth published an article in the ABA Section of Real Property, Probate and Trust Law's publication "Property and Probate" in which he recommended several steps for attorney's to take in drafting powers of attorney to maximize the likelihood that they will be honored. Mr. Wentworth's advice was well taken when the article was first published, and it is still good advice today:
* Grant general powers in the document so that there is no risk the agent exceeds her authority.
* Also include specific powers clearly authorizing the actions the agent is likely going to need to take.
* Don't use "springing" powers of attorney that don't go into effect until you are incapacitated or, if you do, be very clear about what triggers their effectiveness.
* If you're appointing more than one person, clearly permit them to act separately (unless you really don't want them to).
* Sign several originals so that they are available for different financial institutions to review.
* Sign a new power of attorney every few years so that there's less likelihood that it may have been revoked and there's a long-term record of your desire to appoint your particular agent.
* If available, also sign any powers of attorney form offered by the financial institutions in which you have funds.
Any power of attorney that observes these guidelines is far more likely to be honored than not. Thanks to the Elder Law Answers Blog for this post on the subject.
