A durable power of attorney is one of the most important estate planning documents there is. It allows someone you appoint — your agent or “attorney-in-fact” — to act in your place for financial purposes when and if you ever become incapacitated. However, many people experience difficulty in getting banks or other financial institutions to recognize the authority of an agent under a power of attorney.
Banks are often reluctant to accept powers of attorney for fear of being sued if the power of attorney isn’t valid. A certain amount of caution on the part of financial institutions is understandable. Still, some institutions go overboard, for example requiring that the agent indemnify them against any loss, insisting that they will only recognize an agent appointed under their standard form, or flat out refusing to recognize any power of attorney.
To prevent problems later, first ensure that you and the individuals you appoint as agent understand the requirements for beginning the authority of the agent. For example, some powers of attorney will require that your doctor, or multiple doctors, certify in writing that you are incapacitated prior to the agent’s authority in the power of attorney be enacted. In addition, ensure that the power of attorney document includes all the legal authority your agent will need to conduct your financial affairs later. It is also a good idea to update your power of attorney frequently so the financial institution knows it is current. Banks and other financial institutions will be less hesitant in recognizing a power of attorney that is a few years old versus one that is decades old.
If a bank or other financial institution is giving your agent a hard time about accepting a power of attorney, your agent can try talking his or her way up the chain of command. He or she can also provide an affidavit certifying that the power of attorney is valid. This certification is conclusive proof under Indiana law of the validity of the power of attorney in which the bank or other financial institution can rely. If the bank or other financial institution continues to stonewall your agent, Indiana law gives strong legal recourse to your agent. Unless the bank or other financial institution provides a legitimate reason, in writing, within ten days of the refusal to accept the authority of the agent, it can be held liable for damages. Indiana Code 30-5-9-9 provides that the bank or financial institution may be held liable for damages caused by such refusal, up to three (3) times the amount of actual damages, plus attorney’s fees and prejudgment interest.
If you have not updated in your power of attorney in a while, you should consider reviewing it and executing a new one. Furthermore, you should consider hiring an elder law attorney to review your power of attorney document to ensure your agent has all the authority necessary to act on your behalf. The elder law attorney can also point out pitfalls of certain appointments. For example, you should considering avoiding appointing multiple attorneys-in-fact to act jointly as many banks will refuse to undertake the responsibility to ensure that all attorneys-in-fact are approving every transaction of the bank account. We would be honored to review your power of attorney and other estate plan documents with you to ensure they give your team the authority it needs to act on your behalf. Please contact us today to schedule an appointment.
Jeff is Certified as an Elder Law Attorney (CELA) by the National Elder Law Foundation, a distinction held by only a handful of lawyers in Indiana. For almost 20 years, he has focused on elder law, estate planning, long-term care planning, Medicaid planning, Veterans Affairs benefits planning, special needs planning, guardianships, and estate administration.