Some financial institutions are very reluctant to accept powers of attorney unless their own forms are used. Image: James R. Martin/Shutterstock.com
By: FEDweek StaffA power of attorney grants someone (the “agent”) authority to act on behalf of another party (the “principal”). A “durable” power of attorney remains in effect once the principal is determined to be incompetent. A “springing” power of attorney is not effective until the principal is judged incompetent.
Some people prefer a springing power so that no one will be authorized to act on their behalf while they’re still capable. A springing power might go into effect after two doctors have certified incapacity.
Nevertheless, some advisors prefer a full power of attorney, not a springing power. If someone becomes incapacitated, the situation will be stressful enough. You don’t want hassles with a bank or brokerage firm. That is, it may be difficult to establish the principal’s incompetency and put a springing power into effect.
Some financial institutions are very reluctant to accept powers of attorney unless their own forms are used. They’re concerned about the liability they might have if they permit transactions under a form that’s not valid. Therefore, you should make sure that your power of attorney will be accepted by your main financial institutions.
In addition, it’s probably better to have just one person authorized to exercise the power. If two or more people are involved, the financial institution may insist that they all sign off, even if one party is authorized to act alone. Using a joint power is more cumbersome.
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