Monday, August 25, 2014
Power of attorney has always been an inexpensive way to give someone the right to act on another person’s behalf. Yet, the power is not absolute and when it fails, the consequences can be disastrous.
For Christine, a 62-year-old woman in Connecticut, experienced the powerlessness power of attorney embodies. After sorting out their parents’ estate, Christine’s older brother promised he would set his own affairs in order so they would not face the same messy process. He drafted a will, titled accounts to transfer to them on death, and drew up a power of attorney should he become incapacitated. Years later, when Christine’s brother began suffering from severe dementia, he needed indefinite care. Christine knew there would be no problem paying for this since he had done well financially. However, when she looked at the power of attorney, she noticed he used her legal first name, Carol, which she had abandoned. It was not until she went to bank after bank explaining the situation, was she denied access to his accounts to pay for his care. “They said ‘Go get your marriage certificate’ . . . . I had my birth certificate, passports, a driver’s license. But they did not have the name my brother had on that form.”
Estate planners say that Christine’s experience is not uncommon. Banks routinely try to deny the appointed person any right to have access to accounts. One valid reason for banks’ hesitancy is because a power of attorney can be used to commit elder fraud. Banks have been sued for giving access to accounts without properly checking the person named in the power of attorney.
A better option all around might be a revocable trust. It allows people to put their property in a trust while they are still alive, using it as they normally would. “Banks are more comfortable with this because you’re funding it now while you’re competent.” Provisions can also be written into revocable trust documents that allow future trustees to put in assets that were forgotten when the trust was created.
See Paul Sullivan, Power of Attorney Is Not Always a Solution, The New York Times, Aug. 22, 2014.
Special thanks to Matthew Bogin (Law Offices of Matthew B. Bogin) for bringing this article to my attention.