power of attorney Does your power of attorney really work?

Unfair trade practices? Banks do it all the time

(by Jan Warner and Jan Collins / United Feature Syndicate)

Question: My father kept my mother in the dark financially, so, when he suffered a stroke several years ago and was admitted to a nursing home, my mother was not prepared to take responsibility. To further complicate matters, Dad had not signed a power of attorney.

Because everything was in his name, she had to go to court to get appointed as his guardian and conservator in order to get enough money to pay the bills. This was an expensive and time-consuming situation, and Mom vowed that she would never put me and my brother through this if she became ill.

So, before Dad died, she went to a lawyer and signed a durable power of attorney that appointed me to handle her finances should she become incapacitated. Ironically, she, too suffered a stroke and became disabled shortly after Dad died.

I took her power of attorney to the bank where my parents had done business for nearly 30 years in order to establish a checking account, to transfer funds with which to pay her expenses and to tend to her brokerage account. You can imagine my shock when the banker told me that it was bank policy not to accept powers of attorney, and that I would have to apply for guardianship to access her accounts.

With no one making the investment decisions about her stocks, the value of her brokerage account dropped. With no one telling the bank not to renew a certificate of deposit, it was automatically renewed for a year at a rate of interest lower than was available elsewhere, The lawyer I contacted told me that because it would be expensive to sue the bank, I should do as they told me.

My question: Why should my mother’s durable power of attorney not be honored by the bank, and how do I get immediate relief?

power of attorneyAnswer: Unfortunately, you are not the first person who has reported this type of intolerable conduct by some banks when dealing with customers who have the misfortune of becoming disabled.

We venture to guess that the signature cards and other documents that your mother signed when she opened her accounts did not provide that if she became disabled, the bank would not accept her power of attorney and would not allow her authorized agent to have access to her funds.

If the power of attorney was signed and filed according to state law, there is no legal reason of which we are aware that in any way justifies the bank’s refusal to honor your mother’s instructions.

It appears to us that the bank is assuming quite a risk in the name of “policy” when your mother’s untended brokerage account is diminishing due to market conditions and her CD is renewed by default when there are better interest rates available.

In fact, we are informed that at least one state has passed a law making banks that do not accept appropriate powers of attorney liable for damages and attorneys’ fees.

Some banks follow the so-called “staleness” doctrine — that is, if a power of attorney is too old based on their guidelines, they refuse to honor it.

While this does not solve your immediate problem, we think this type of conduct looks a lot like unfair trade practices, and a letter from your lawyer threatening suit couldn’t hurt.

Nor would a report to the Better Business Bureau and a complaint to the Consumer Affairs Agency in your state.

Because of this wide-spread practice by some banks, we invite and welcome responses from readers who have had to deal with this type of problem.

For those who are still healthy, it might be a good idea to get a written statement from your bank that your power of attorney will be accepted in order to try to head off this travesty.

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category: Power of Attorney

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