Fleming & Curti, P.L.C. - Problems Using Your Power of Attorney When You Need It?

JUNE 9, 2008 VOLUME 15, NUMBER 50

Problems Using Your Power of Attorney When You Need It?

“I am so frustrated,” our caller reported. “Before my father became ill he did everything he was supposed to do. He signed powers of attorney for financial and health care matters, he updated his will and he listed all his assets in a workbook so I could find everything. Now that he has become incapacitated the bank won’t honor his power of attorney. What can I do?”

We sympathized with the caller (and helped her out with the recalcitrant bank). But it is a problem we see regularly: banks, brokerage houses, insurance companies and other financial institutions too often throw up unnecessary roadblocks to stop the use of properly signed powers of attorney.

In most states (including Arizona) there is no legal requirement that a bank or other financial institution must accept even a properly prepared power of attorney. Some banks are notorious for insisting on use of their own short-form powers of attorney (really just a glorified signature card). Oddly, both of the most difficult banks are large multi-national institutions with roots in San Francisco.

What can you do to make it more likely that your power of attorney (either the one you signed or the one someone else signed naming you as agent) will be honored? There are techniques you can try. Below are a few we often suggest. We have some more thoughts on the subject on our GeriLaw blog; feel free to contribute your own frustrating story and any ideas you have come up with to deal with the problem. Meanwhile, our best suggestions:

1. Work up the chain of command. Insist that the teller you are dealing with bring in the branch manager. Demand that the branch manager call the bank’s legal department. Do not become abusive, as that will give them just the excuse they need to tune you out. But be persistent and insistent. No matter what they say, there is no state law or banking regulation that requires the use of their silly in-house forms.

2. Try the path of least resistance: have your family member sign the bank’s form. Be aware, though, that the bank will probably make him or her come in to the branch to sign. If you are the signer, you might want to visit your bank in advance to make sure that your power of attorney is on file and will be accepted when the time comes -- or to sign the bank's form as a backup to your more carefully crafted power of attorney.

3. Move your accounts. No, really—just say no to banks and financial institutions which may make your family members do back flips to handle simple transactions.

4. Provide your agent with information about how to withdraw (or move) funds using the internet, debit cards and PIN numbers. Be very careful about where this information is stored and to whom it is disclosed, however. If you are the agent and you have the password or PIN, consider using it to move the entire balance to a more cooperative and user-friendly bank. They do exist. Look first for locally-owned alternatives, or a bank and branch where you are well known.

5. Consult a lawyer. One of the primary reasons you signed a power of attorney was to avoid the legal costs of conservatorship, but a lawyer may be able to navigate the bank thicket without having to file anything in court. But your lawyer may be able to work through the command chain more effectively than you (we know, it's not fair -- but it does sometimes work). Your best bet: consult the lawyer who drafted the power of attorney. She will probably be more persuasive in negotiations with the bank.

Dealing with financial institutions can be frustrating. As the industry continues to consolidate and to favor efficiency over personalized service, the frustration is likely to grow. Even in the face of that mounting frustration, however, it is critical that you complete your planning, and urge your parents, spouse and loved ones to do the same.