The Power of Attorney for Property: Magic Wand or Ineffective Tool?
When preparing an estate plan for a client, attorneys typically advise the client that he or she needs a power of attorney for property. The document is valuable, but is not without pitfalls.
What is a power of attorney for property? A power of attorney for property, sometimes referred to as a durable power of attorney, is a document that is designed to allow a person other than the principal (the person signing the document) to make financial decisions for them. In other words, it is a bunch of pieces of paper that tell the world who is allowed to manage your money, sell your property, access your accounts.
Why create the form? Powers of attorney are handy dandy. For example, let’s say my husband and I are buying a new house and he can not attend the closing. If I have his power of attorney for property, I can sign his documents for him.
Who can use the form? The person granting the power of attorney (principal) must be over age 18, of legal capacity, and must know what they are doing. Often, children of aging parents call to ask if I can prepare a power of attorney for the parent to allow the child to access accounts. If the parent lacks capacity, or can not carefully consider the matter without pressure or undue influence, guardianship is the only answer.
The form is not without risk. The person named as your agent must be trustworthy.
The form is not without limitation. Even assuming that you choose your agent wisely, the power of attorney for property form alone does not make an estate plan. By definition the form will expire at the death of the principal leaving probate as the option.
Acceptance of the form is not guaranteed. Under Illinois law, the power of attorney for property should be accepted without the authentication of the principal. Unfortunately, large banks do not seem to understand that this is Illinois law.
Let me tell you a story. A client, let’s call him Bill, who was aging named a friend, Sue, as his agent under a power of attorney for property. Bill had capacity, intent and a plan in place. Bill then went to his summer home is far north Wisconsin with Sue and became ill. He could not travel and could not leave his local doctor. Money started to become an issue. Sue needed to access Bill’s bank accounts to pay his increasing medical costs. Sue sent a copy of the power of attorney to the Bill’s bank. The bank refused her access to the accounts. The bank insisted that Bill present the form in person. I explained that he was very sick and could not travel, but that I drafted the form, witnessed his signature, could provide an affidavit to its validity and would certify that Sue was indeed Sue. The bank told me they were sorry but they could not accept the form under their “policy” without Bill coming into a branch office. The nearest branch office was 70 miles from his vacation home.
Despite the fact that this requirement was in contravention to Illinois law, the bank would not budge. Bill and Sue could have taken them to court. Like David and Goliath, I really think we would likely have won. But, the fact of the matter is that the cost of litigation was not worth the effort. Bill picked a “good day” and made his way to the nearest branch office to sign their form in front of their witnesses.
So, what is the moral of this story? You can not rely on a power of attorney for property alone as a method for accessing funds on behalf of another person. There are no magic wands. Yes a power of attorney for property is handy dandy, but do not assume it will do everything you want it to do. Use your power of attorney for property as part of a carefully constructed plan and make sure your assets are aligned with the plan.
Should you have any questions about Power of Attorney for property or estate planning or would like to schedule a free initial consultation, please contact Waltz, Palmer & Dawson, LLC at (847)253-8800 or contact us online.
Waltz, Palmer & Dawson, LLC is a full-service law firm with various areas of service to assist your business, including: Employment Law, Intellectual Property, Commercial Real Estate, Business Immigration, Litigation and general Business Law services. Individual services include Estate Planning, Wills and Trusts, Probate, Guardianship, Divorce and Family Law.
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