As many people have realized, even a properly prepared and executed power of attorney can be rejected or question by a third party, such as a bank or insurance company. Those entities may demand proof that the power of attorney is still valid or may reject it as “stale” because it was executed too long ago.
There was a time when these legal documents were rarely challenged. They were rarely exploited, as well. Unfortunately, the number of cases of adult children outright stealing from their parents, through the power of attorney, has increased over the years, prompting lawmakers to focus more on power of attorney abuse.
Power of attorney abuse gained national attention in 2007 when the son of philanthropist, Brooke Astor, was indicted for attempting to “unjustly enrich” himself, by using her power of attorney. He was ultimately convicted in 2009 for, among other things, grand larceny, after stealing more than $1 million from his mother.
Banks and other financial companies began taking their own precautions by imposing tough requirements for acknowledging powers of attorney. For instance, banks routinely reject powers of attorney that were signed more than 6 months ago and powers of attorney from out of state. These higher standards make it tough for the well-meaning adult children to care for their parents’ affairs when necessary.
It may seem easier to just meet the bank’s requirements, rather than battle with them for acceptance. However, in some situations, the requirements imposed by the banks are burdensome or nearly impossible to meet. So, how do we strike a balance?
Most states have enacted statutes governing powers of attorney, but not all actually require banks and other entities to honor a power of attorney. Lawmakers and regulators began voicing their concerns with the inconsistency of these state laws. As a result, the National Conference of Commissioners on Uniform State Laws approved the Uniform Power of Attorney Act in 2006. Only nine states have adopted this uniform law, including Nevada.
The Uniform Power of Attorney Act was created in an attempt to bring uniformity to power of attorney, which have rapidly become a significant estate planning tool. Nevada adopted the Uniform Power of Attorney Act in 2009.
One of the provisions of the act addresses “Liability for Refusal to Accept Acknowledged Power of Attorney.” Under this provision, a third party must either accept an acknowledged power of attorney or request a certification, translation, or an opinion of counsel within seven business days of presentment. Once requested, the third party must accept the power of attorney within five business days of receiving the requested document. Also significant is the provision that a third party cannot require an additional or different form of power of attorney, which banks had begun to do routinely.
If you have questions regarding a power of attorney in Reno, or any other estate planning needs, please contact Anderson, Dorn & Rader, Ltd. either online or by calling us at (775) 823-9455.
A power of attorney is a legal document giving an agent the authority to act on someone else’s behalf. In Reno, Nevada, the person creating the power of attorney is known as the “principal,” and that person chooses a person who may act on their behalf called the "agent." A power of attorney is frequently used to bestow power and authority to the agent to handle the principal's financial and/or medical decisions.
Even though a power of attorney in Reno can be very useful, as with most things, there are some disadvantages that should be considered before giving someone authority to act on your behalf. Since your agent will be given full legal authority to act on your behalf, it is critical that you choose someone trustworthy and whom you believe will act only in your best interests.
An agent is required to follow your directions whenever taking actions on your behalf. However, she could make mistakes or, even worse, use her authority fraudulently. Because the agent makes decisions and takes actions on your behalf, while you are not present, you will not have immediate control over the actions taken.
For instance, your agent may have the authority to withdraw money from all of your bank accounts. Although you asked her to withdraw only a certain amount from one of them, she may mistakenly take money from the wrong account. What’s worse, she may take money from your bank account entirely without permission. While the agent may be liable to you, the bank, unfortunately, cannot be held responsible, as long as the power of attorney is valid. Also, you should understand that almost all powers of attorney are "durable," meaning they are valid even if the principal later becomes incapacitated. Challenging the agent's actions in that case becomes even more complicated.
Even though a power of attorney is a legally binding document, and under Nevada law institutions are required to accept a valid power of attorney, some entities such as banks or mortgage companies, may require additional internal procedures before they will recognize the authority of your agent. If your power of attorney does not meet the bank’s internal policies, your agent will have trouble accessing your accounts at that particular institution. You may avoid some hassles by using the bank's own power of attorney form, if the bank has one.
It is not difficult, generally speaking, to revoke a power of attorney. Though the rules of revocation are different from one state to another, it is generally required to be in writing and all third parties with whom the power of attorney has been used, must be notified. If the power of attorney was used in the transfer of real estate, it was likely recorded; therefore, the revocation must also be recorded. This is a very important step. If an institution does not receive proper notice, your agent could continue to act for you without your authority and the institution would not be the wiser. In that situation, if notice was not provided, the institution would not be liable for any financial loss resulting from your agent’s unauthorized acts.
If you have questions or concerns regarding creating a power of attorney in Reno, and whether there are alternatives that are better suited for your needs, contact your Reno estate planning attorney for assistance.