On occasion, we skip our usual letter and response format to discuss topics that we feel are important to everyone. This is one of those times.
A Durable Power of Attorney is a legal instrument in which you may appoint someone you trust as your agent, or “attorney-in-fact.” Your agent then has the legal authority to go forth and work your will. You agent can use your power of attorney to conduct business on your behalf, such as dealing with your income taxes, retirement accounts, the phone company, banks, brokerage firms, etc. Simple, isn’t it?
It’s not so simple. Banks and other financial institutions are notorious for not accepting powers of attorney other than their own forms. CalPERS won’t let you initiate your spouse’s retirement, if he or she is disabled, with a power of attorney other than their own form. Insurance companies frequently deny perfectly valid powers of attorney because they don’t include specific language related to insurance. Sometimes, companies will even claim that a power of attorney is too old and can no longer be used.
Most of the time, when a company claims that a power of attorney is invalid for what you want to use it for, they are lying to you, and they are in violation of California law.
Why do they do this? We have a theory. Banks don’t like to make mistakes, because that can be expensive. Banks don’t allow employees, even managers, to exercise discretion, because that may lead to mistakes. Bank employees are allowed to accept their own forms, but perfectly valid and legal powers of attorney usually must be forwarded to the legal department for review. To minimize costs, a bank’s first line of defense is to reject a power of attorney out of hand.
There are several solutions available to you. The least expensive is the path of least resistance. Use the company form, if you are able to. It’s stupid and legally unnecessary to have to do this, but it works.
If you can’t use the bank’s form, maybe because your parent or spouse is already incapacitated, see a lawyer. We have developed a threatening letter that induces bank managers to call us. The letter explains that if they don’t accept the power of attorney, you’re going to sue them, and the law provides for the payment of your lawyer fees. It’s remarkably effective, because the law in on our side.
The last thing you can do is to keep your power of attorney up to date. Even though an older power of attorney is valid, a newer one with more specific language is more readily accepted. And whatever you do, don’t lose an original power of attorney - copies are useless, other than copies certified by a Notary Public.
Len & Rosie