So you decided it was important to have an estate plan. However, you decided to find forms online and fill in the blanks yourself. One of the forms you filled in was a Power of Attorney. You wanted to make sure that when you were no longer able to make financial decisions for yourself (incapacitated), that you named a trusted person to make those decisions on your behalf.
What happens if you become incapacitated and your family needs to take your Power of Attorney to the bank to gain access to your accounts and they are denied? Why would a bank deny a Power of Attorney?
Two reasons why banks sometimes reject a Power of Attorney (POA):
(1) It is not 'durable': If a Power of Attorney is not a 'durable' POA then it is only valid while the principal (the person who signed the document and is appointing someone else- their 'agent' to act on their behalf) is of sound mind.
‘Durable’ means the POA continues to be effective after the incapacitation of the principal.
BEWARE: People who find a POA form online do not realize the significance of it needing to be a 'durable' power of attorney. They tend to draft a POA that is not durable and end up with a useless document.
“Think twice about saving money by drafting your own estate planning documents. A short term saving can often turn into a greater expense in the long run.”
(2) It has not been activated: The POA may be 'springing'. This simply means that it only becomes effective upon the incapacitation of the principal. Typically it will require a physician to examine the principal and determine they are no longer capable of managing their affairs due to mental incapacity. If that is the case, the bank will want to see the physician's letter before accepting the POA.
BEWARE: As of October 1, 2011, in Florida 'springing' powers will only be effective for a POA drafted before October 1, 2011. If someone drafts his or her own POA online with a springing power it will be deemed ineffective.
How To Handle Power of Attorney Problems with Banks
Even with a properly prepared POA, you might run into problems with trying to get banks and other financial institutions to recognize the form's validity. Banks are sometimes nervous to allow access to a customer's accounts for fear of a lawsuit if they allow access to the wrong person or even the right person under the wrong circumstances.
Think twice about saving money by drafting your own estate planning documents. A short term saving can often turn into a greater expense in the long run.
If you live in Miami-Dade, Broward, or Palm Beach counties contact an experienced estate-planning attorney at The Hershey Law Firm, in Fort Lauderdale, Florida, at (954) 303-9468 to discuss your estate planning needs. You can’t predict the future, but you can plan for it.