Fairfax, VA (Law Firm Newswire) July 27, 2016 – A power of attorney is an important legal document that grants someone the right to take action on behalf of another person regarding financial decisions.
It is often used by adult children whose parents are advanced in age and are no longer able to make decisions independently. However, challenges sometimes arise because financial institutions do not always facilitate the process of exercising that power. Therefore, families must take measures to avoid the potential problems stemming from a power of attorney.
There are many kinds of powers of attorney. For instance, a durable power of attorney permits an adult child or other trusted individual to assume responsibility for a person’s financial affairs at any time. A health-care power of attorney is relevant to decisions concerning medical care. However, powers of attorney are frequently exploited, either by adult children who hope to supplement their wealth, or by criminals who create counterfeit documents in an attempt to take funds from the elderly.
Consequently, banks that have concerns about liability for customers’ losses have become suspicious of accepting powers of attorney. In response, some states have adopted laws that mandate acceptance by banks in specific situations.
Prominent Vienna, Virginia estate planning attorney Lisa McDevitt states, “A power of attorney can help ensure that a loved one’s wishes regarding finances and health care are carried out, and thus, should be honored.”
Hope Heyman of Greenburgh, NY, who is 63 years old, said that only one of eight banks that held assets for her recently departed father, Paul Heyman, recognized her power of attorney following his stroke in July 2014. Ms. Heyman said it took her three months to acquire control of her parents’ assets to pay their expenses.
In some cases, adult children have felt compelled to file a lawsuit against a bank in order to become a parent’s legal guardian. The process can be costly and tedious, and is generally open to the public. However, there are measures children can take to prevent such issues from escalating into a court battle.
The child should first find out the type of power of attorney the parent has established. A standard durable power of attorney grants the child the authority to act on behalf of the parent right after the document is signed. A springing power of attorney only grants the child that authority when the parent loses capacity.
Although parents often choose the springing type of power of attorney, attorneys say it can cause difficulties for children, and should be superseded by a durable power of attorney. When using a springing power of attorney, several forms require an adult child to secure a statement from a minimum of one named person, usually a doctor, verifying that the parent has lost capacity. However, due to privacy laws with respect to medical care, it can be challenging to speak with another person’s doctor. Furthermore, a physician may be reluctant to sign such a statement.
Adult children and their parents can avoid such problems if parents facilitate an introduction between the adult children and a financial adviser before the situation becomes critical. The children can then discover more information regarding the processes and systems that the banks require.
Even families in other countries, such as Britain, are confronting challenges as they try to use their power of attorney to assume control of the finances belonging to a parent, relative or friend in order to pay for the person’s home care or living expenses. The right to use a power of attorney is as necessary as a will or life insurance, and was not intended to cause such stressful situations.
Lisa Lane McDevitt
2155 Bonaventure Drive
Vienna, VA 22181