By Krystian R. Seebert, Attorney, Generation Law
A recent MSN article highlighted the following challenges agents under powers of attorney often face when trying to use those documents. The frustrating part of using powers of attorney is that agents present perfectly valid powers of attorneys at banks or other financial institutions only to have those entities wrongly reject them. This can cause a lot of frustration.
1. They want the principal to show up.
The principal is the person who appoints a power of attorney agent to act on their behalf in the event of incapacity. So If you appoint your spouse as your agent, you are the principal. We have known financial institutions to demand that the principal show up with the agent when the agent wants to use the power of attorney. In addition to planning for the principal’s disability, financial powers of attorney allow for increased convenience for the principal, because the principal essentially “outsources” various tasks to the agent. If the principal could go to the financial institution himself or herself, they might not be relying on a power of attorney in the first place. This is wrong. If a financial institution gives you difficulty about the principal not being present, be adamant that the principal does not need to appear. Many times it helps if you call in advance to find out what the institution wants you to show to use the power of attorney. Many times, you can solve the issues over the phone. If difficulties persist, please contact our office and we can help advocate.
2. They say something is wrong with the documents.
Most Illinois attorneys draft powers of attorney using the use power of attorney form that is set out in the Illinois power of attorney law. We do this because we know that financial institution legal departments are more likely to approve something they are familiar with rather than a custom drafted document. Still, some financial institutions refuse to use these forms and insist that agents use forms that institutions prepare according to their own internal requirements (such as releasing banks from certain liability in the use of powers of attorney) . While the law requires these institutions to honor powers of attorney when presented, some of them will not do so unless you obtain certain other documents or threaten to sue them. Since it is expensive to sue a financial institution for not honoring a power of attorney, their refusal to honor a power of attorney can stop you from doing what you need. The solution in many cases is to agree to sign the intuition’s internal power of attorney form (while the principal is mentally competent). While we don’t like this option, sometimes you have no choice.
If an institution insists that you use their power of attorney form, you may consider using it. However, these forms should be reviewed carefully to make sure that they do not revoke any powers of attorney that we previously prepared. If you need to sign a financial institution’s power of attorney form, please give us a call first if you would like us to review it.
3. The principal dies.
Powers of attorney are prepared for the principal’s lifetime and no longer have any effect upon death. After the principal dies, an individual has to rely on authority provided by other documents, such as a trust or will. The distinction between being an agent under a power of attorney or an executor under a will is confusing to many people. The general rule is that a power of attorney can control assets (that are not in a trust) only while the principal is alive. The trustee of a trust can control trust assets while the principal is alive and after death. The executor of a will controls assets that are solely in a person’s name at death (no trust, no joint tenancy, no beneficiary on account). The executor only has this power after a court appoints him or her to be executor using a court order based on an appointment written into a will.
So, if one of your loved ones has passed away recently, please contact us to make sure that the proper documents are given to your loved one’s banks, investment firms, and other institutions.
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