POA and POD

Our New Accounts Manager attended a seminar held by Sunwest Training Corp. and specifically asked if a person using a valid POA could remove a POD from an account. She was told that a POA could not remove a POD. Does anybody have any feedback on this? Of course, we have a situation where the POA wanted to remove the POD from the account, then changed her mind and left the account alone. Now the owner of the account has died, and the POA, who was not the POD, is upset and wants the money. Thanks for any and all help.

Unless the POA document is limited or restricted in some way, I am not aware of such limitations. If the attorney-in-fact has all rights conferred with a durable POA and is acting in full stead of the principal, I would think they could remove an account beneficiary. Well, how 'bout that, legal eagles??

Regulars must get really tired of hearing this: "Take a look at the law in the state where you are located."

If you are in Florida, the answer is a no-brainer:

FSA709.08(7)(b) Notwithstanding the provisions of this section, an attorney in fact may not:

5.Create, amend, modify, or revoke any document or other disposition effective
at the principal's death...unless expressly authorized by the power of attorney...

Unfortunately, most state laws are not as well crafted to protect the elderly as Florida's are. Several states do not provide statutory direction, they would wait for you to decide and then let a court figure out if you were correct.

Absent specific guidance under state law, if the POA did not expressly allow for the creation or modification of POD provisions, I would not accept it for that purpose. To do so would be the equivalent of letting the attorney-in-fact rewrite the principal's will. This questioner's fact situation also makes it a little easier to say "no" - an attorney-in-fact should not do anything that benefits herself, directly or otherwise, when acting on the principal's behalf.

If they want to do an end run around you, they can; e.g. use funds from POD accounts first, close them to consolidate funds into a single account with different POD provisions etc. I would just prefer not to assist them with their efforts.

I agree that you must look to any protective state laws in order to get an answer. I also agree, however, that in the absence of a restrictive state law, the AIF can change the POD if:

(1) the POA is broad enough to permit this ("my AIF can do anything I can do"), but

(2) most states have passed the Uniform Fiduciary Act. Although it doesnt specifically address a change in a POD benef, it does provide as follows:

"A person who in good faith pays or transfers to a fiduciary any money or other property which the fiduciary as such is authorized to receive is not responsible for the proper application thereof by the fiduciary.";

"If a check is drawn upon his principal's account by a fiduciary who is empowered to do so, the bank may pay the check without being liable to the principal, unless the bank pays the check with actual knoiwledge that the fiduciary is committing a breach of his obligation as fiduciary in drawing such check or with knowledge of such facts that its action in paying the check amounts to bad faith.".

In other words, a bank must act in good faith when it permits a change in the POD AND when it ultimately, pays the $ out to the new POD. If the language in the POA is broad enough, at least you can argue that the AIF was given tha authority to do anything the principal could and the principal must have understood the risk s/he was taking in granting such broad authority.

If, however, the POA states the AIF cant change the POD designation ("my AIF shall not be entitled to any incidence of ownership in any of my property"), then I dont think changing the POD designation is permissible.

I AM NOT ENGAGED IN PROVIDING LEGAL ADVICE AND THE VIEWS EXPRESSED ARE NOT THOSE OF MY EMPLOYER

Ken-Thanks so much for that update on Florida law. I will get this out to my Florida banks today.

I can't voice a caution loud enough to truly express my ongoing concerns about powers of attorney. We have a procedure in place requiring each POA be reviewed by a Branch Administration Officer prior to acceptance. This removes the pressure from our branch employees in trying to read a legal document across the desk from an often irritated individual who is not our customer (while their kid is trying to shimmy up your leg for a dum dum sucker!)

We decline more POAs than we accept. When we ask the attorney-in-fact why they are invoking the POA, the answer is often because the parent has Alzheimer's disease and can no longer handle their own affairs. That just doesn't work when the document was executed the day before.

This area is filled with land mines.

quote:

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We decline more POAs than we accept. When we ask the attorney-in-fact why they are invoking the POA, the answer is often because the parent has Alzheimer's disease and can no longer handle their own affairs. That just doesn't work when the document was executed the day before.

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If the AIF states the principal has Alzheimer's - one quick check is to see if the POA is a durable POA or not. If the POA is not durable, then it ceases to become effective upon the mental incapacity of the principal - or at least that's how I understand it works in California.

(NOTE - I am not an attorney and this should not be taken as legal advice.)

You are correct. We accept only durable powers of attorney; however, if the AIF is telling you the principal was incompetent when the document was executed, it is not, and never will be, a valid instrument. It's time for someone to petition to be Conservator.

Interspersed in the above comments are a number of stipulations a bank might impose before accepting a POA. Requirements that it be:
*durable,
*prepared by an attorney,
*accompanied by an affidavit executed by the attorney-in-fact,
*reviewed by bank counsel prior to acceptance and
*valid under the laws of the state where the bank is located
are good places to start.

The above can eliminate a lot of case by case discussions. For example, if the POA is prepared by an attorney, he or she is ethically obligated to ascertain the principal's capacity before the document is executed. The attorney is expected to be willing to testify in court that the individual was competent and the attorney's testimony to that effect would be hard to overcome. Ironically, it is lawyers, not doctors, who feel most comfortable assessing competency.

Each requirement you impose should be thought through under state law. Ironically, someone needs to have the power to waive the bank's requirements on a case by case basis. While intended to protect the bank,their application in some circumstances may put the attorney-in-fact in an impossible situation and cause financial harm to the principal while not affording the bank any reasonable protection.

Most CSRs hate POA's because every one is treated like a case of the first impression. Banks can put their employees in a more user friendly position by setting up a template on what to look for in the document.

When in doubt on POA questions it may be best to check with the bank's attorney. We don't have a staff attorney but have a local attorney who bills us on a monthly basis for time spent. It can be well worth the expense to have a legal opinion when dealing with POA's. In Minnesota the POA form has an area to indicate if the attorney in fact can or cannot transfer funds to themselves. This is along with an expiration date are 2 items we watch out for.