When Your Power of Attorney is Powerless

A recent article in the New York Times entitled Finding Out Your Power of Attorney is Powerless describes a common scenario: Your parents have signed a durable power of attorney that allows you to handle their finances – taxes, bills, bank accounts, real estate sales – if they become incapacitated. Then the time comes when your parents can no longer manage on their own.
 
You take the witnessed and notarized document to a financial institution, and they refuse to honor it. They insist that your parents sign the institution’s own power of attorney form. Unfortunately, your parent may no longer be competent to sign the form, leaving you powerless to manage your parent’s financial matters.
 
Financial institutions defend this practice. They are aware of the financial exploitation of older adults, especially those with cognitive impairment, and that the perpetrators are often family members. They are also concerned about their own liability.
 
The article suggests proactively asking the bank if it requires its own durable power of attorney document while your parents are still able to manage their own finances. If it does, have your parents sign it when they are still capable of doing so. Of course, you will have to do this for every institution where they have an account.
 
This is one good reason to have a living trust. Living trusts are more widely accepted by financial institutions than powers of attorney. Contact your estate planning attorney to find out if a living trust is right for you or your parents.