A durable power of attorney is one of the most important estate planning documents there is. It allows someone you appoint — your agent or “attorney-in-fact” — to act in your place for financial purposes when and if you ever become incapacitated. However, many people experience difficulty in getting banks or other financial institutions to recognize the authority of an agent under a power of attorney.
Banks are often reluctant to accept powers of attorney for fear of being sued if the power of attorney isn’t valid. A certain amount of caution on the part of financial institutions is understandable. Still, some institutions go overboard, for example requiring that the attorney-in-fact indemnify them against any loss.
To prevent problems later, contact your bank when you execute your power of attorney to find out what information it needs to accept the document. Many banks or other financial institutions have their own standard power of attorney forms. The bank cannot force you to sign its form instead of accepting your valid power of attorney, although sometimes that is the path of least resistance. You can get the bank’s form and sign it in addition to your own power of attorney form, but confirm this with your attorney. While, it isn’t legally necessary, signing the bank’s form can save your agent a lot of trouble and time down the road. In addition, you can provide the bank with copies of your power of attorney. It is also a good idea to update your power of attorney frequently so the bank knows it is current.
If a bank is giving you a hard time about accepting a power of attorney, you can try talking your way up the chain of command. You can also have the lawyer who prepared the power of attorney call the bank. If that doesn’t work, you may have to have a lawyer deal directly with the bank. At Dutcher & Zatkowsky, we have found many financial institutions are more cautious about powers of attorney since the dramatic revisions to the law effective September 1, 2009 and revised again in September 2010.