A new client recently asked Kirsten a question that resonated: “What can we do so we don’t face the same pushback I did when my mom’s bank wouldn’t accept her power of attorney?” It’s a frustration many families face—you have all the right documents, but when it’s time to use them, banks and institutions push back.
In this quick-tips episode, Kirsten Howe explains why powers of attorney are the most problematic basic estate planning document—not because they’re poorly drafted, but because they require acceptance from a third party who doesn’t know you to trust that your agent is legitimate. She walks through the bank’s perspective on why they hesitate, and shares practical strategies to make sure your documents actually work when you need them most, including re-signing your POA periodically, keeping assets in your trust, and filling out your bank’s own power of attorney form.
Time-stamped Show Notes:
0:00 Introduction
1:24 The client question that inspired this episode: “What can we do to avoid the hassle I had with my mom’s power of attorney?”
1:52 To get things started, Kirsten talks about what a power of attorney is and how it should work.
2:28 Next, let’s discuss why powers of attorney are the most problematic estate planning document
3:18 The bank’s perspective: Why financial institutions push back even on legally valid documents
4:09 Kirsten’s own experience challenging powers of attorney—why healthy skepticism is prudent
6:15 Re-sign your power of attorney every year or two to keep it fresh and current
6:45 Keep assets in your trust—banks respond more favorably to successor trustees than POA agents
7:45 For accounts outside your trust, consider adding your child as a signer
8:00 Fill out your bank’s own power of attorney form—they can’t question their own paperwork
Transcript:
Hello and welcome to Absolute Trust Talk. I’m Kirsten Howe, glad to see you back again. I’m doing a series of very short episodes that might feel a little different for my regular listeners, compared to the type of episodes we usually do. These episodes are not meant to educate you on the law or introduce you to allied professionals who have businesses and offer services that might be of interest or of need. They’re more like my attempt to share with you some of the insights that I’ve acquired over the many years I’ve been doing this—little tips, little things that even if you already have an estate plan and you don’t think you need to update it, you might learn something that will cause you to take action and do something that could make things better in your estate plan.
You know, we’re always trying. That’s the goal. One of the biggest goals of estate planning is to make things easy and simple, unconfusing for the people that you leave behind. And a lot of these little tips that I’m going to do in the next several episodes are intended for that—to make things as easy as we possibly can, even if we’ve already got all the necessary documents in place. Okay, so the goal is to sort of eliminate some of the misses that we want you to avoid, the missteps, the misconceptions, the mishaps that we have seen over the years cause minor trouble and sometimes big headaches for our clients.
I want to share a few of those things with you, and the first one, I’m going to start talking about just a little bit about powers of attorney. And this was inspired by a new client that I met with recently, who said to me, ” You know, we want to update our estate plan. We know we need to make some changes. But here’s the thing—what can we do to make sure that we don’t have the kind of hassle with our power of attorney that I had with my mom’s power of attorney? And that is just such a common problem, and to have a client express it so beautifully to me, it really made me think I have to talk about this.
Power of attorney—let’s start with, what is it? It’s a legal document where you have named somebody as your agent, and you’re giving that person the legal authority to act for you, and they can act in any capacity that you authorize. Generally, we try to make it broad so that they can do all of your legal and financial things for you if you become incapacitated. Everybody should have one. It’s part of a complete basic foundational estate plan, and all my clients have them.
But what we notice is that it is probably the most problematic of the basic estate planning documents, and it’s problematic in that in order for it to be effective, some third party who doesn’t really know you and doesn’t really know your agent has to be willing to honor it and accept it, and by virtue of your power of attorney, work with your agent. For example, your bank. You have a bank account. The bank account is in your name—my name, Kirsten Howe—and if my agent shows up with my power of attorney and says, “Okay, now you’re going to have to let me have access to that bank account, because I have this document here.” This is where we get pushback from financial institutions, and I’m not going to single any of them out. They all have their reasons.
A valid power of attorney is supposed to be accepted. They are required to accept it, and eventually they will, but oftentimes it’s after a lot of pushback, and sometimes it’s not until we get involved. And it shouldn’t be that way. We don’t want things to escalate to the point where you’re paying your attorney to make your bank honor your documents. That’s expensive. It takes a long time.
When this client made this statement, I thought, well, I can think of a number of things that we can do, and I want to put them all together in one episode. If you look at it from the bank’s perspective, I get that because I have also been asked to accept powers of attorney. I’ve had new clients come to me and say, “My mom is incapacitated, and I have her power of attorney, and I want you to do this for me, using my power of attorney.” I don’t know these people. I didn’t write that document. I don’t know if that’s still a valid document. Maybe Mom signed that five years ago, and then she changed her mind and signed a different one. Maybe this was just pulled out of the trash somewhere. Maybe it’s a forgery. I don’t even know.
So, you know, you can certainly see the bank’s perspective in being a little hesitant to accept the power of attorney. And so, you know, I’m in a situation like that, I’m not going to do anything that I don’t think Mom would do, and I’m certainly not going to do anything without the knowledge and consent of all the people concerned, not just the one child who comes forward. So, you know, I, in my own way, challenge powers of attorney as well, and it’s prudent to do so, but you want your power of attorney to be effective and accepted when necessary.
The advice I gave this client, and now sharing with you: we have seen that the older the power of attorney, the more pushback we get. You know, why not just once a year or once every two years, sign your power of attorney over again. Go back to your lawyer and say, let’s just print it out again. I’ll sign it again. New date. It’s fresh. So that’s one thing that’s pretty easy to do.
The second thing we also see is that we don’t have the same kind of pushback when this child goes to the institution and says, “I’m now the trustee of my mom’s trust, because my mom’s incapacitated, and now you have to deal with me.” The child can produce all the necessary documents showing that they are, in fact, the trustee, and in fact they produce the trust, and the bank knows that the account is owned by the trust. So, the bank is much more familiar with this situation. They already have an account in this trust, a copy of the trust document, and can verify, “Yes, this person is, in fact, supposed to be the trustee.” We have found that getting access to assets is much easier when they are held in a trust, which is consistent with our overarching advice: put everything in your trust.
Now, for those clients who really want to keep a checking account outside of the trust—and there are reasons to do that, and I’m not fighting on that. That’s a whole other episode. But if there is an account that you really don’t want to put in your trust, I’ve got a couple of things to say. You could—and I don’t recommend this as a blanket thing—but you could just add the child as a signer on that particular account, and then that way, if mom becomes incapacitated, the child is already a signer on the account, it’s not a big deal.
The other thing I recommend is that you go to that bank, that financial institution—the big ones all have their own form of a power of attorney. And so, I’m not saying get rid of the power of attorney that your lawyer prepared for you. That’s still necessary, that’s general. It’s going to apply to all aspects of your life, but fill out the specific institution’s power of attorney form. Now they have a form. They know that you filled it out. They know it’s what you want because you haven’t come back to change it, and it’s on their form. So they can’t get excited about, “Well, I don’t understand it. Is it valid? I don’t know.” This is, I think, probably your best strategy to make sure that some kind of power of attorney is going to be honored by the financial institution that you’re dealing with.
Okay, so I hope that’s been helpful, and that you’re going to run out to your bank and fill out their power of attorney form. Thanks so much for listening. And our next episode, we’re going to be back again with a couple more little tips like this, just to help make your lives a little easier. I appreciate you listening in, and I look forward to connecting with you next time.
Resources Related to This Episode:
- A Will is Not Enough – Securing Your Legacy with Estate Planning Life can change in an instant. A will is not enough to be prepared. Get free access to our actionable E-book Guidebook #1 and start protecting your legacy today. https://absolutetrustcounsel.com/guidebooks/
- Learn how to comfortably define gray areas and assess your unique needs to build a secure future now effortlessly. Check out Guidebook #2, Estate Planning Beyond the Basics, here > https://absolutetrustcounsel.com/guidebooks/
- Get our free introductory guide to the most used estate planning tool, family trusts, and understand how we plan to help protect your family. Guidebook #3: https://absolutetrustcounsel.com/guidebooks/
- Absolute Trust Counsel would love to offer access to our Incapacity Planning resource page: https://AbsoluteTrustCounsel.com/Incapacity-Planning/. We’ve collected our top planning information all in one place so listeners can find videos, guidebooks, blog posts, and a host of information with tips and strategies on implementing, planning, and protecting themselves and their loved ones.
- We’re pleased to provide a library of e-books to address common estate planning questions and concerns in practical, easy-to-understand language. https://AbsoluteTrustCounsel.com/Resources/.
- ASK KIRSTEN: If you’d like Kirsten to answer your question on the air, please email her at Info@AbsoluteTrustCounsel.com.
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