Unfortunately, there is a trend of banks and other financial institutions refusing to honor Powers of Attorney because they are not on the institution’s forms. This can cause a variety of complications if discovered after someone is incapacitated. But how can they do that? This video, recorded in Wyoming while there attending The Estate Planning Source’s Advanced Institute, covers legally how they can and what you can do about it.
The bank says “Well we can’t honor that because it’s not on our form.” Well wait a minute, what does that mean?
In this video, Jeff talks about why Powers of Attorney aren’t necessarily wide open when you’re dealing with a bank or other financial institutions. This is something that has been happening and developing more in recent years where people will go into a bank with a power of attorney (POA) because someone has become incapacitated and they may hear well we can’t honor that POA because it’s not on our form.
Power of Attorney
Here is why this sometimes happens. It is because Powers of Attorney are designed by the legislature, here’s where it works. If there is no kind of pre-existing contract then the Power of Attorney will allow someone to step into your place and deal on your behalf. So if there’s something with the electric company and you need to switch something around, but the person is incapacitated and you need to cancel the service or move it somewhere else. Oh, they need to sign it to get it moved. Wait I have a Power of Attorney. Oh, then it is okay.
When you are dealing with banks and financial institutions, a lot of that starter paperwork to open accounts typically says we can change the terms and conditions whenever we want. Unfortunately, that is just the way it is when you’re dealing with a financial institution, it is largely a take-it-or-leave-it situation.
And then they send you like every 8 to 16 months a mailing where they say here are some fine print changes to your account, read this. Somewhere in there it probably said we now have our own forms for Power of Attorney and you to fill them out if they are going to be honored here. Otherwise, they are just going to say no, you need to go get a Guardianship so that a Court is actually ordering us to listen to you. That’s the way it works.
When my clients are in the funding process meaning putting assets into the trust, there might be an account that would just be easier for them to leave outside the trust but make payable upon death into the trust. The bank has accepted that the terms of the trust are going to govern who is in charge. That’s the way that works.