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A Practical Approach to a Power of Attorney

By Deirdre R. Wheatley-Liss, Esq.

I always tell clients that just having a General Durable Power of Attorney is not enough - you need to have a broad and flexible General Durable Power of Attorney that will aid your attorney in fact, not hinder them. Remember that this will need to be used to make financial decisions for you, when you cannot otherwise make them for yourself. This is not the time to be entering into a debate about what limitations you might have been intending - make limitations clear, or not at all.

In a recent blog posting Make Your Durable Power of Attorney Work, Elder Law Answers echos this point in discussing the practical elements of a General Durable Power of Attorney. Some key points below:

An essential part of any estate plan is the durable power of attorney, through which you appoint someone else to handle your financial and legal issues in the event you are unable to do so because of illness, disability or incapacity. The problem with these documents is that not all financial institutions accept them all the time, and it's hard to predict which will and which won't ahead of time.

Why won't your bank or investment house accept your validly executed power of attorney? Because they are worried about liability in the event:

* The document in fact was forged.
* You had revoked the power of attorney before its use.
* The person you appoint exceeds the powers you gave him in the power of attorney.

In any of these cases, the financial institution may be held liable for any losses you incur. On the other hand, it may also be held liable for losses you incur if it unreasonably refuses to honor your power of attorney.

So, what can you and your estate planning attorney do to make it more likely that your appointment of an agent will be accepted? This question is answered by Daniel A. Wentworth, Esq., Senior Legal Counsel with Fidelity Investments in the November/December 2003 issue of the American Bar Association's Probate & Property journal. Attorney Wentworth recommends taking the following steps:
* Grant general powers in the document so that there is no risk the agent exceeds her authority.
* Also include specific powers clearly authorizing the actions the agent is likely going to need to take.
* Don't use "springing" powers of attorney that don't go into effect until you are incapacitated or, if you do, be very clear about what triggers their effectiveness.
* If you're appointing more than one person, clearly permit them to act separately (unless you really don't want them to).
* Sign several originals so that they are available for different financial
institutions to review.
* Sign a new power of attorney every few years so that there's less likelihood that it may have been revoked and there's a long-term record of your desire to appoint your particular agent.
* If available, also sign any powers of attorney form offered by the financial institutions in which you have funds.

To read the Probate & Property article, go to: http://www.abanet.org/rppt/publications/magazine/2003/nd/wentworth.html

Full post as published by New Jersey Estate & Elder Planning Blog on July 11, 2007 (boomark / email).