Not-so-powerful powers of attorney


Everybody should have a power of attorney (POA), which is a legal document that provides a designated individual the right to act on another person’s behalf when making financial decisions. Adult children, when representing their parents, often use a power of attorney. They use this powerful document to make decisions for their aging parents when they are not capable of making sound decisions on their own. The most common decisions that the adult children encounter relate to money and this is becoming problematic in some states. For example, banks are witnessing situations where adult children, who are seeking to enrich themselves at their parents’ expense, abuse a power of attorney. Suspicious of liability, some financial institutions no longer accept the power of attorney documents. Regrettably, in some cases, adult children with the best intentions have to take legal action to enforce a document executed in good faith.

It is paramount to understand the differences between two types of powers of attorney. For instance, a durable power of attorney gives the designated person the authority to act on the parent’s behalf immediately after the document is signed. To the contrary, a springing power of attorney does not generally provide the representative the authority until the parent becomes incapacitated. Most powers of attorney documents are “springing,” which can create extra complications for adult children because they have to obtain a statement from a physician certifying that their parent is incapacitated. Recent medical-privacy laws can make it difficult for the doctor to communicate this information without authorization, leading to a Catch 22. On the other hand, the durable power of attorney does not encounter such problems.

It is vital that you identify the necessary hurdles that you might have to jump over to satisfy the POA requirements of your bank or financial service firm. Perhaps it might be a comforting fantasy to think that just because you have a valid POA that your institution will accept it, but regrettably, it is not reality.

The take home message to this critical estate-planning matter is to recognize that simply having your lawyer draft power of attorney may not be enough to accomplish what your power of attorney is designed to do. Therefore, I strongly suggest that you either utilize your financial service firm’s power of attorney or have your institution review your POA now to determine if it is acceptable. However, just because it is satisfactory today does not mean it will be adequate forever. Pretty frustrating, huh?

Harry Pappas Jr. CFP®

Managing Director-Investments

Master of Science Degree Personal Financial PlanningCertified Estate & Trust Specialist ™

Certified Divorce Financial Analyst™Pappas Wealth Management Group of Wells Fargo Advisors

818 North Highway A1A, Ste 200

Ponte Vedra, Florida 32082


The use of the CDFA™ designation does not permit Wells Fargo Advisors or its Financial Advisors to provide legal advice, nor is it meant to imply that the firm or its associates are acting as experts in this field.

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