When people think of estate planning, they often think of wills, trusts and probate. Planning for the distribution of an estate is only one side of the coin, however. Equally important is planning for incapacity – what happens to a person’s estate if they become unable to manage and control it either temporarily or permanently due to illness, injury, or memory disorders such as Alzheimer’s disease or dementia? A attorney has the answers and can craft the right set of documents to deal with this unfortunate situation which often afflicts the elderly yet could also arise at any time. Read on to learn about why a durable power of attorney should be included in your estate plan, and contact the Strategic Counsel Law Group in Tampa to customize an estate plan to meet your needs.
What Is a Durable Power of Attorney?
When you execute a power of attorney, you are authorizing another person (not necessarily an attorney) to act as your agent and make decisions on your behalf. Powers of attorney are sometimes created for a one-time transaction, like to have someone act for you in buying a car or a piece of real estate or to represent you in a business deal. If someone is going to be out of the country for an extended period, they might give somebody power of attorney to manage their affairs here in Florida while they are abroad.
In the context of estate planning, a power of attorney is given to someone to manage your personal affairs if you become disabled and cannot handle things on your own. If you are laid up in the hospital or a nursing home for an extended period, for instance, a person with your power of attorney could take care of all of the following for you:
- Make bank deposits and withdrawals to your checking and savings accounts
- Manage your investments
- Pay your rent or mortgage and utilities
- Pay for lawn care and property maintenance and repairs
- Sell a home or car or other property
- Get you admitted into a nursing home or other care facility
- Apply for Medicaid, SSI or other government benefits on your behalf
- Prepare and file your taxes or hire a tax preparer to do your taxes
Once executed, a power of attorney lasts until it is revoked or until the person who granted the power of attorney becomes disabled. Of course, for purposes of estate planning, you are creating the power of attorney precisely to handle things if you do become incapacitated. For that reason, a power of attorney should be drafted with specific provisions that make it durable, meaning it will last even during a period of incapacity. The power of attorney can still be revoked once you regain capacity if you so choose.
The durable power of attorney can also be drafted with special provisions that make it “springing.” In this way, the power of attorney will not become effective until some triggering event occurs, like a period of incapacity. Only then does it “spring” into force. In this manner, you can create a power of attorney as part of your estate planning, and even though you may never need it, it is there if you do.
Can the Bank Refuse to Honor a Durable Power of Attorney?
Banks are finicky when it comes to granting other people access to their customers’ accounts, which in general is a good thing. Their reluctance can cause problems for the holder of a power of attorney, though. Many banks like to provide their own power of attorney document and have the account holder sign it so they know it’s legitimate, but this is not always possible; the account holder might already be incapacitated by the time the bank is presented with a durable power of attorney.
Florida law requires banks to honor a power of attorney that has been presented to them. To protect banks and provide them with some reassurance, the law will not hold banks liable for honoring a fake power of attorney that appeared to be valid, although they are still on the hook for reimbursing funds that were misappropriated using a power of attorney that was obviously fraudulent or revoked.
Banks can legitimately refuse to honor a durable power of attorney on a number of grounds, including:
- The bank believes that an elder person is being physically or financially abused by the agent who presents the power of attorney
- The bank has asked the agent for an affidavit or has requested a lawyer’s opinion and is waiting on a response
- The bank knows that the power of attorney has been revoked
- The bank holds a good faith belief that the power of attorney is not valid or that the agent is trying to exercise authority that is not granted by the power of attorney
Banks in Florida have four days to provide a written response whenever they refuse to honor a power of attorney. It’s reasonable to expect that bank managers might scrutinize powers of attorney very carefully before granting someone access to another person’s accounts. One way to avoid any problems is to make sure your power of attorney is carefully drawn up by a qualified legal professional. It can also be a good idea for the principal to share a copy of the power of attorney with the bank beforehand while the principal still has capacity and can assure the bankers that the document is legitimate.
Help With Durable Power of Attorney
Having powers of attorney in place can help avoid having a guardianship or conservatorship placed over you or your estate if you become disabled. It also helps prevent arguments in the family over who should be in charge of your affairs and keeps the court from putting a professional conservator in charge who manages your estate for a fee but doesn’t know your particular needs and wants. Call Strategic Counsel Law Group to discuss including durable powers of attorney in your estate plan.
