Part of estate planning is to have a Power of Attorney; in case you become incapacitated then someone else can arrange your financial affairs for you.
Sometimes we hear stories how financial institutions will not honor the Power-of-Attorney your estate lawyer created. As financial planners working with clients who are trying to arrange their parents’ affairs, we hear the frustration and disappointment when they tried to use their Power of Attorney to pay their parent’s bills only to have the bank deny their access to their parent’s accounts. How is this possible?
It is not only banks, but all financial institutions have their own rules, ‘forms’ and attorneys who interpret the regulations. Your Power of Attorney might be legally correct and you can fight to win access, but it takes time, which you might not have when your parent(s) need funds and it causes more distress at a time when you don’t have the emotional wherewithal to battle and scale the financial institutions legal walls.
What we, as financial planners, do to prevent this from happening is to work with our clients to contact their banks and financial institutions to understand their particular rules for Powers of Attorney. Some institutions have their own forms that must be filled out, notarized and filed in addition to your own Power of Attorney. Others have forms holding the bank or financial institution legally harmless should any challenges be made about the validity of the holder and the power of attorney itself.
Now that tax season is almost over, it might be a good time to check with banks and/or financial institutions to see if the existing power of attorney is valid or if more paperwork is needed. Even if the paperwork was accepted years ago, it does not mean the institution will honor it as their rules may have changed or the rules of the state has changed. New York state has very specific rules about what must be stipulated in a power of attorney to keep it valid. This is also the time to review the ‘powers’ you are giving to someone; be sure your wishes have not changed, and the appointed person is still appropriate and willing to carry out your directives. We would be happy to go over this with you.
Anja & Clare
