By Patricia N. Miramon
You heeded the omnipresent warnings to have an estate plan. You have a will, advance medical directive, and a durable power of attorney. Among other things the durable power of attorney allows someone to handle your finances such as taxes, bills, bank accounts, and real estate sales if you become incapacitated. You sleep soundly, content that your family will not be ensnared in chaos or dispute as a result of death or incapacity. You’ve done everything right. Or so you think.
Years later the time comes when you can no longer manage finances on your own. Your children take the power of attorney to a financial institution and the officials say that they will not honor your durable power of attorney. They insist that your children have you sign the institution’s own power of attorney form. The bank’s rationale is they want to protect themselves from liability for fraud. This may be a big problem because by now, you as the account holder may not be competent to sign legal forms. That is the whole reason for the power of attorney in the first place.
A durable power of attorney is a document in which a person (the principal) grants another person (the agent or the “attorney”) the authority to act upon the principal’s behalf. In Louisiana, a power of attorney is also known as a mandate or Contract of Mandate. The Louisiana Civil Code sets out the regulations governing mandates in the state. According to Article 2994 of the Civil Code, a principal may confer general authority upon the mandatory to carry out all acts appropriate under the circumstances. The law does not require a mandate to be in a specific statutory form. You can sign a general mandate (power of attorney), authorizing the principal to deal with all your affairs in the event you become incapacitated or limit the mandate to specific matters such as selling a car or completing a tax return.
Louisiana law requires that a person be mentally competent at the time of signing a mandate. Often by the time a person needs an agent to act on their behalf through a power of attorney, they are already not competent to handle their financial matters. The refusal of banks and other financial institutions to accept properly drafted powers of attorneys is becoming more and more frustrating for clients and attorneys in the United States. The question then becomes what can we do to prevent this from happening to us or our loved ones?
You can be proactive and call and ask the principal’s financial institutions if they require their own durable power of attorney document and if they do, sign it when you are still capable of doing so. But read the forms carefully or have a lawyer review them. They can contain disadvantageous indemnity or arbitration clauses, or provisions that contradict the individual’s power of attorney. This will have to be done for every financial institution where the principal has an account. You could also provide your agent with information about how to withdraw or move funds using the internet, debit cards, and PIN numbers. You could also consider moving your funds to a locally-owned bank that would be more cooperative than one of the larger financial institutions. You can also add someone to your accounts. This would allow full access to the funds. But once again, this would have to be done at all financial institutions where the person has an account.
If you are considered to be military personnel, you should probably draft a military power of attorney. According to Louisiana Revised Statute 9:3861, a military power of attorney can be executed by military personnel or other persons eligible for legal assistance under the provisions of 10 U.S.C. 1044 or regulations of the Department of Defense. Federal law exempts the military power of attorney from any requirement of form, substance of formality, or recording that is prescribed for powers of attorney under the laws of a state. The powers granted by the military power of attorney are broad and sweeping. This form of power of attorney will also likely be accepted by all financial institutions because Louisiana Revised Statute 9:3885 ensures that they will not be held liable if they acted in good faith when honoring the military power of attorney. It is only required that they act in good faith, the power of attorney appears to be valid, and there is a notary public’s certificate of acknowledgment.
But what can you do if it’s already too late and your relative cannot sign the financial institution’s power of attorney form? You can try to insist to the bank teller that you want to speak to a branch manager and demand that the legal department be called. You can politely inform them that there is no state or banking regulation that requires the use of their “in house” forms. If that does not work, you may have to have an attorney take the financial institution to court and try to get the court to order that they honor the power of attorney. Some families have had to petition to interdict their loved one in order to be able to handle their finances. This is a long and expensive process to go through when all you wanted to do was pay your parent or relative’s bills.
Dealing with financial institutions can be frustrating. As the industry continues to consolidate and to favor efficiency over personalized service, the frustration is likely to grow. Even in the face of mounting frustration, however, it is critical that you complete your planning, and urge your parents, relatives, spouse, and loved one to do the same. A detailed power of attorney must be one of your estate planning documents. Let’s put the power back in your Power of Attorney by taking these preventative measures and assuring peace of mind to all.