It is best to keep your POA up to date, so it can be used when it is needed.
While California Powers of Attorney do not expire, they can be rejected more frequently due to the passage of time. It is often useful to execute a form power of attorney provided by your bank in addition to your more general power of attorney if it appears they may be reluctant to honor the one you present. Because you are granting someone else significant authority over your property, financial institutions are very concerned about liability issues should they honor an invalid power of attorney. There are lessons to learn from this story out of Pennsylvania.
Does your Power of Attorney read “and”? Does it read “or”? Better be sure and better be up to date, so it does not face rejection, according to The Mercury in “Planning Ahead: Will your bank honor your power of attorney?”
In Pennsylvania, major changes were made to the POA law in 2014 that addressed wording, witnessing and other requirements and protections for the party accepting the POA. The “Vine fix” law describes what a bank, financial institution or other party who is presented with a POA can and cannot do. The “Vine fix” provides immunity to anyone who accepts a POA in good faith, without actual knowledge that the POA is invalid.
This law came about as a result of a case, Vine v. Commonwealth of PA State Employees’ Retirement Board. A Pennsylvania State employee, who was incapacitated following a car accident and a stroke was given a POA to sign by the man who was then her husband. He changed her retirement options and later filed for divorce. At issue was the question of whether Mrs. Vine could invalidate his option and file for disability benefits. She did not have legal capacity, when she signed the document.
This was a case of hard facts making bad law. The State Supreme Court found that a third party (the Pennsylvania State Employees Retirement Board) could not rely on a void power of attorney, even where it did not know it was void when it was accepted. Banks saw the decision and were concerned that they could be sued for damages in similar cases.
The new law offers some immunity and additional protections for banks. However, as a result, there’s a little more push back with banks recognizing agents under power of attorney. The bank can request an agent’s certification or affidavit or opinion of counsel, as to whether the agent is acting within the scope of his legal authority. There is still a civil liability for refusing to accept a power of attorney that meets all the requirements.
Some estate planning attorneys have their clients obtain Power of Attorney forms directly from the institutions. This decreases the chances of any problems, when POAs are presented. It’s also a good idea to update the POA when you update your estate plan, which should be every three or four years. Regardless of your state of residence, a POA dated 10 or 15 years ago is likely to meet with some scrutiny.
An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances and advise you on keeping it up to date.
Reference: The Mercury (April 2, 2019) “Planning Ahead: Will your bank honor your power of attorney?”
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