One Well Crafted Power of Attorney is All You Need
Durable powers of attorneys are important to manage the affairs of incapacitated adults. Often we are forced to file guardianship proceedings because a client has either no power of attorney or an inadequate power of attorney. Approximately half of all states have adopted some version of the Uniform Power of Attorney Act. Delaware has had its present statute since October 31, 2010.
Recently, Seattle University law professor James Brown reviewed powers of attorneys to help identify critical questions to avoid surprises and strengthen the enforceability of the documents.
A common complaint among attorneys is that certain institutions (generally financial institutions) insist clients use the institution’s forms. This leads to confusion and the revocation of carefully drafted inclusive documents with a power of attorney that may only cover bank and financial transactions and may appoint different agents than the original power of attorney. A financial institution’s power of attorney may include specific indemnification language in favor of the institution which is not required by law. Prof. Brown’s article notes the Uniform Statute for Powers of Attorney provide the formal requirements for creation of a durable power of attorney including acknowledgment before a notary and competent nonfamily witnesses.
Prof. Brown cautious against using “forms” for creating powers of attorneys. Many powers of attorney unfortunately provide statutory restrictions on gifting which is contrary to Medicaid planning. The purpose of this restriction seems to be to avoid federal gift and estate taxes, which is rarely a consideration for most clients.
Finally, there is the issue of when a power of attorney may become effective. Powers of attorneys which become effective under specific circumstances are called “springing” powers of attorney. In the experience of many, establishing whether such a power of attorney is effective is often as cumbersome as obtaining a court guardianship, since one or two physicians must certify that the grantor of the power is incapacitated. Additionally, a financial institution may require repeated certifications whenever an agent attempts to use a springing power of attorney. For that reason, Florida, when revising its power of attorney statute in 2012, eliminated all springing powers of attorney in Florida whatsoever.
If your bank requires a power of attorney for the transaction you are considering, do not sign a new one, instead provide the power of attorney we created for you. It should be more than sufficient for any banking activity.