There is a very common and very disruptive misunderstanding that comes up in estate planning, and it usually doesn’t show up until something has already gone wrong. By the time it surfaces, families are frustrated, financial institutions are refusing access, and someone is pointing fingers, trying to figure out what “failed.”
This is one of those situations where the problem isn’t a bad document. It’s a misunderstanding of how the document actually works.
When Power Of Attorney Doesn’t Work
A while back, I received an email from someone acting as an agent under a power of attorney. She also happened to be a licensed attorney, which made the tone of the email even more surprising. She was angry, direct, and very confident in her conclusion that I had “screwed up” the power of attorney document because it did not allow her to access her client’s bank account.
From her perspective, the analysis seemed simple. She had a valid power of attorney; she presented it to the bank, and the bank refused to give her access. Therefore, the document must be defective.
What Was The Real Problem
The problem had nothing to do with the power of attorney. The account she was trying to access was not owned by the individual. It was titled in the name of the trust. That distinction is everything.
A power of attorney gives an agent authority to act on behalf of an individual with respect to that individual’s assets. Once an asset is transferred into a revocable living trust, it is no longer owned by the individual in their personal capacity. It is owned by the trust. That means the rules governing access to that asset are no longer controlled by the power of attorney. They are controlled by the trust.
The Fix
In this situation, the correct path forward was not to argue with the bank or question the validity of the power of attorney. The correct approach was to present the trust document showing that she was the named successor trustee, along with whatever documentation the trust required to establish that the original trustee was incapacitated. In most cases, that means one or more doctors’ statements confirming incapacity.
Once those pieces are in place, the successor trustee steps into authority and can manage the trust assets, including bank accounts titled in the name of the trust. That is the correct “key” for that particular door.
Trying to use a power of attorney to access a trust account is like trying to use your car key to unlock the front door of your house. When it doesn’t work, the problem is not that the key is defective. It is that you are using the wrong key for the wrong lock.
What makes this issue more frustrating is that it is not uncommon. People assume that a power of attorney is a universal access document that works across all assets, regardless of how those assets are titled. That assumption is simply not correct. Financial institutions are not being difficult when they deny access in these situations. They are following the legal structure of ownership, which is exactly what they are supposed to do.
Estate Planning Coordination
This is why coordination matters in estate planning. It is not enough to have a power of attorney and a trust sitting in a folder. The plan has to be structured so that the right people have the right authority over the right assets under the right circumstances. When that coordination is missing—or misunderstood—you end up with delays, confusion, and unnecessary conflict at exactly the time when families can least afford it.
If you want to understand how to set this up properly so your family is not stuck dealing with these issues, I put together a free course that walks through how these documents actually work in the real world, not just in theory.
You can access it here: www.FreeTrustCourse.com
It will help you understand how to make sure your plan works the way it is supposed to when it is actually needed.