A power of attorney (POA) can be a tremendously valuable tool when a person needs to designate someone to act on his/her behalf in financial, legal and other matters. But banks, brokerages and other financial institutions sometimes refuse to accept a POA—instead sending the designated “agent” away and complicating such tasks as withdrawing money from accounts or buying and selling investments in an account. Those institutions may want to try to make sure that the document, which typically is invoked when the account holder is incapacitated, is valid and that the person named as agent is not engaged in “financial abuse”—that is, trying to cheat the account holder.
Here’s how to reduce the odds that a designated agent will encounter problems and how an agent can convince financial institutions to let him take control…
Creating the POA
If a POA is being created for you or someone you are helping, such as a parent, be sure to follow these guidelines…
• Consolidate financial matters at as few financial institutions as possible. Fewer financial institutions means fewer future hassles for the agent.
• Get preapproval. Many institutions will review and accept a POA in advance.
• Complete POA forms provided by the financial institutions, if available, rather than a general POA. Institutions are more likely to honor their own forms.
• Set up a durable immediate POA, not a springing POA. The latter type will “spring” into effect only when the person creating the POA becomes incapacitated. Proving incapacitation creates an additional hurdle for the agent. The durable immediate POA takes effect as soon as the document is signed and remains in effect if the person becomes incapacitated.
• Have two witnesses and a notary present when the POA is signed. In some states, this is required, and even when it isn’t, it can help confirm the legitimacy of the document.
If You Are the Agent
When a financial institution balks…
• Remain calm and courteous with the institution. Flying off the handle will only increase the concern that you cannot be trusted to look after the client’s interests.
• Ask the institution, “What can I do to help with this process?” For example, it might allay the institution’s concerns if all the heirs come in together and agree that you should be allowed to manage the account.
• Ask an attorney whether the institution is legally mandated to accept the POA. In many states, institutions must accept POAs as long as that state’s “statutory” POA form was used. Institutions generally back down when this is called to their attention.
• Ask a court to name you as the financial guardian for the account holder. This allows you to manage the account even if the institution won’t accept the POA. It is time-consuming and expensive, however, so it should be considered a last resort.
