Even When Done Correctly, Managing Finances During Incompetency Can be Challenging
A durable power-of-attorney is designed to allow someone to manage aspects of your life in the event you become incapacitated. For instance, imagine a situation where you had a stroke and could no longer communicate. Who would pay your bills? Who would deal with your insurance? What if you needed to access your IRA account to pay for in-home care? These are the problems that a durable power-of-attorney is designed to address. A power-of-attorney designates an agent (or attorney-in-fact) to make these decisions and manage your life during incapacity. Two recent articles published in the Los Angeles Times, however, illustrate the occasional challenges with powers-of-attorney facing even those who thought they planned properly.
The first article discussed the challenges faced by one couple who, after hiring an attorney to prepare a durable power-of-attorney, presented the document to Boston-based Fidelity Investments, where the couple held their retirement accounts. Despite the fact that the power-of-attorney had been prepared by an attorney, Fidelity initially advised the couple that their retirement plan didn’t have “a power-of-attorney provision.” In other words, Fidelity would not honor the power-of-attorney. Fortunately, Fidelity is reviewing its policy and anticipates being able to accept permanent versions of powers-of-attorney in the next few months.
Another article illustrates the problems allegedly faced when a son, David, went to access his father’s IRA accounts to pay for his father’s 24 hour care. According to David, he was required to make nine trips to Bank of America before bank officials allowed David to access his father’s IRA accounts to pay for his care. Some of the delays encountered by David included the bank’s demand to see the original document, the bank refusing to allow David to act alone because he was named as a co-attorney-in-fact, and even a legal interpretation by the bank’s counsel that the power-of-attorney did not cover the IRA accounts.
While these situations are frustrating, it is important to realize that the alternative—not planning—is many more times more frustrating and expensive. Using David’s situation as an example, without a power-of-attorney no bank would allow David to access to his father’s accounts. In California, David would be forced to apply to the court to obtain a conservatorship over his father. The conservatorship process can take weeks and requires that the court appoint counsel for David’s father. Between court costs, attorneys, delays and other problems associated with conservatorships, David would most likely have spent several thousands of dollars simply to obtain access to his father’s money to pay for the care. Such expenses may have made the difference between allowing David’s father to remain in his home or transferring to a facility.
When planning for incapacity, a power-of-attorney is a critical document. As these stories illustrate, however, it is frequently a good idea to check with your financial institutions regarding their policies concerning powers-of-attorney. By insuring that you are in compliance with the institution’s policies before you become incompetent, you may save your loved ones a world of frustration.
The first article discussed the challenges faced by one couple who, after hiring an attorney to prepare a durable power-of-attorney, presented the document to Boston-based Fidelity Investments, where the couple held their retirement accounts. Despite the fact that the power-of-attorney had been prepared by an attorney, Fidelity initially advised the couple that their retirement plan didn’t have “a power-of-attorney provision.” In other words, Fidelity would not honor the power-of-attorney. Fortunately, Fidelity is reviewing its policy and anticipates being able to accept permanent versions of powers-of-attorney in the next few months.
Another article illustrates the problems allegedly faced when a son, David, went to access his father’s IRA accounts to pay for his father’s 24 hour care. According to David, he was required to make nine trips to Bank of America before bank officials allowed David to access his father’s IRA accounts to pay for his care. Some of the delays encountered by David included the bank’s demand to see the original document, the bank refusing to allow David to act alone because he was named as a co-attorney-in-fact, and even a legal interpretation by the bank’s counsel that the power-of-attorney did not cover the IRA accounts.
While these situations are frustrating, it is important to realize that the alternative—not planning—is many more times more frustrating and expensive. Using David’s situation as an example, without a power-of-attorney no bank would allow David to access to his father’s accounts. In California, David would be forced to apply to the court to obtain a conservatorship over his father. The conservatorship process can take weeks and requires that the court appoint counsel for David’s father. Between court costs, attorneys, delays and other problems associated with conservatorships, David would most likely have spent several thousands of dollars simply to obtain access to his father’s money to pay for the care. Such expenses may have made the difference between allowing David’s father to remain in his home or transferring to a facility.
When planning for incapacity, a power-of-attorney is a critical document. As these stories illustrate, however, it is frequently a good idea to check with your financial institutions regarding their policies concerning powers-of-attorney. By insuring that you are in compliance with the institution’s policies before you become incompetent, you may save your loved ones a world of frustration.
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