Understanding Power of Attorney Documents: Ensuring Acceptance and Effectiveness

Estate Planning is not for people who are about to pass away. Estate Planning is for everyone that is over the age of 18. A Power of Attorney (POA) is a crucial legal document that grants someone you trust the authority to act on your behalf in financial, legal, or healthcare matters.

Whether due to illness, disability, or other circumstances, having a POA in place will provide peace of mind and ensure that your affairs are managed according to your wishes. But wait - How do Power of Attorney documents work, what are the different types of Power of Attorney documents that are available, and how do we ensure they are accepted by your financial and healthcare institutions?

Understanding Power of Attorney:

A Power of Attorney is a legal document that allows you (the principal) to appoint someone you trust (the agent or attorney-in-fact) to make decisions and take actions on your behalf if you fall incapacitated or   unable to make decisions on your own. 

There are several types of POAs, each with its own scope and limitations:

• Durable Power of Attorney: Remains in effect even if you become incapacitated or unable to make decisions on your own. This is the best type of POA to use for estate planning to ensure the scope covers incapacitation. (A Non-Durable POA will become invalid if the principle were to be deemed incapacitated.) 

• General Power of Attorney: Grants broad authority to the agent to manage your affairs in all situations allowed by the local law. General POAs can be durable or non-durable. 

• Springing Power of Attorney: Gives authority for an agent to act on your behalf once a specific condition is met, typically when you’ve become incapacitated and can no longer care for yourself. 

• Financial Power of Attorney: Authorizes the agent to make specific decisions about your money and property, for example: paying bills and other expenses, make deposits and withdrawals in your bank account, collect and manage retirement benefits, sell or rent out real estate, and file your taxes.

• Healthcare Power of Attorney: Authorizes the agent to make medical decisions on your behalf if you are unable to do so. This can include decisions related to medical treatments, medications, surgeries, end-of-life treatments, and choosing doctors and hospitals for care.

Ensuring Acceptance by Financial Institutions:

The worst thing in the world would be to think you have all the documents needed for a trusted family member to handle your care, soon to realize these documents have not been accepted by the institutions you do business with. 

To ensure that your Power of Attorney documents are accepted by your financial institutions and other entities, it's essential to follow these steps:

• Use the Correct Form: Use a legally valid Power of Attorney form that complies with the laws of your state.

• Obtain Notarization or Witnesses: Depending on state law requirements, your POA may need to be notarized or witnessed by two disinterested parties to be valid.

• Provide Clear Instructions: Clearly outline the agent's authority and responsibilities in the POA document to avoid confusion.

• Notify Financial Institutions: Inform your banks, investment firms, insurance companies, and other financial institutions about the existence of your POA and provide them with a copy of the document. Many institutions will not accept a power of attorney form that is older than 5 years. 

• Update Regularly: Review and update your Power of Attorney documents periodically to ensure they reflect your current wishes and circumstances. Remember to bring these updated Power of Attorney forms to the institutions you do business with. 

Communicating with Financial Institutions:

When presenting your Power of Attorney documents to financial institutions, it's essential to communicate effectively and provide the necessary documentation to ensure they are accepted and kept on file properly:

• Be Proactive: Contact your financial institutions in advance to inquire about their requirements for accepting POA documents and to ensure a smooth process.

• Provide Copies: Provide copies of your POA document to the relevant parties, along with any additional documentation requested by the institution.

• Advocate for Acceptance: If you encounter resistance or challenges in getting your POA document accepted, advocate for its acceptance by explaining its legality and importance.

Overcoming Challenges:

Despite your best efforts, you may encounter challenges in getting your Power of Attorney documents accepted by certain institutions. Some common challenges include:

• Outdated Forms: Some financial institutions may require updated or specific forms that comply with their internal policies. 

• Lack of Understanding: Employees at financial institutions may not fully understand the legal requirements and implications of Power of Attorney documents. Properly educate yourself to ensure you know what type of POA you require and what it covers. 

• Privacy Concerns: Financial institutions may be hesitant to accept POA documents due to privacy concerns or potential liability issues. Make sure to follow the processes outlined by the institutions you do business with to ensure they are accepted and filed properly. 

Seek Legal Advice:

If you encounter challenges in getting your Power of Attorney documents accepted, it may be helpful to seek advice from a legal document preparer who specializes in estate planning. They will review your documents, provide guidance on how to address any issues, and advocate on your behalf if necessary.

Power of Attorney documents are essential tools for managing your affairs and ensuring that your wishes are carried out in the event of incapacity or disability. By understanding how POAs work, following best practices for ensuring acceptance by financial institutions, and seeking legal advice when needed, you can ensure that your Power of Attorney documents are effective and provide the protection and peace of mind you need.