Theoretically, executing a financial power of attorney allows you to choose a person you trust to act on your behalf to make business and financial decisions, virtually all the decisions you could make for yourself, for you in the event that you cannot make such decisions for yourself. The person to whom you delegate this power is called your Agent or Attorney-in-Fact, and he or she must act under the terms specified in the document when transacting business for you. There are several types of financial powers of attorney:
A general power of attorney comes into legal effect at the time that it is executed. It gives your agent the right to make financial decisions for you, from selling your possessions to paying your bills. Each power that you delegate to your attorney in fact is enumerated in the document. If there are any of these powers that you wish to delete, you may usually do so before you sign the final document.
If the power of attorney is durable, it continues in full force through illness or incapacity. Another approach is the springing power of attorney, which is written and executed in advance, but only takes legal effect upon a pronouncement of incapacity by a licensed physician. A Durable General Power of Attorney is the broadest type of financial power of attorney.
A springing power of attorney is written so that it does not take effect until you have been certified to be incapable of caring for your own affairs. The additional certification can make this power of attorney much more difficult to use than a durable general power of attorney.
Powers of Attorney are generally executed to protect a person during any time of illness or incapacity (they are only valid during the lifetime of the person delegating the power, and cannot be used to settle an estate), but just how easy are they to use?
A survey of financial institutions in the Northern Virginia area shows that different financial institutions may impose their own restrictions on the use of powers of attorney for their customers. When surveying the institutions, the following hypothetical question was posed: “If my parent has an account at your bank, and I am the agent under their durable general power of attorney and I need to do some banking for my parent, what do I need to provide to you to be able to use the power of attorney at your bank?”
The following is a list of restrictions, if any, imposed by ten local financial institutions are listed below. If you bank with any institution not included in the list, it is prudent to check with the institution to see if they have any restrictions or requirements on the use of powers of attorney.
1. Apple Federal Credit Union: (1-800-666-7996) This financial institution requires only the original copy of the power of attorney and one form of identification.
2. Bank Of America: (1-800-880-5454) This financial institution requires only the original copy of the power of attorney and one form of identification.
3. Burke & Herbert Bank: (703/ 549-6600) This financial institution requires only the original copy of the power of attorney and one form of identification.
4. Chevy Chase Bank: (301/ 598-7100) Here I was referred to someone in Virginia to answer my question. The representative stated that the bank’s procedure is to require the original power of attorney, and then the bank will create a new account that states that it is a power of attorney account.
5. F & M Bank: (703/ 359-9380) This financial institution requires only the original copy of the power of attorney and one form of identification.
6. First Virginia Bank: (703/ 241-3333) I spoke to a representative at the Annandale branch. She stated that the bank requires a copy of their own power of attorney form, which must be signed by the person delegating the power (in this example, my parent). If that person is incompetent, you must submit the original power of attorney to the bank’s legal department, who will review it and decide within 2-3 business days whether they will honor the document.
7. First Union Bank: (1-800-275-3862) This financial institution requires only the original copy of the power of attorney and two forms of photo identification.
8. Pentagon Federal Credit Union: (703/ 683-7787) To allow me to perform banking transactions on behalf of my parent, PFCU requires that my parent complete two forms: a statement of identity form and a POA/ agent affidavit. If my parent is incompetent and incapable of completing the forms, the manager of the individual branch has some discretion to review the original power of attorney and to waive the requirement for the additional forms.
9. Sun Trust: (1-800-273-7827) This financial institution requires only the original copy of the power of attorney and one form of identification.
10. Wachovia Bank: (1-800-WACHOVIA) Wachovia requires a signature card completed by the parent and the agent showing both signatures. If the parent is incompetent, they will review the power of attorney and, if it is sufficient, waive the requirement.
Sarah Parks is an estate planner with Custom Estate Planning in Annandale Virginia. If you have any questions or comments about this article, you may contact her at 703/ 333-6011.