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Precautions to Consider for Powers of Attorney

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Question: 
What are some things to watch out for with Powers of Attorney?
Answer: 

Here are some of the things to check for:

  • Does the document appear to have been executed in accordance with the laws of your state or the state of residence of the Principal. If there is a question, check with the bank's legal department or other source of competent legal advice.
  • Is the power of attorney effective? If it's a springing power of attorney, have the conditions for its effectiveness occurred? Can you verify those conditions (incompetence of the Principal, for example)?Can you verify the identity of the individual claiming to be the attorney-in-fact or agent under the Power of Attorney?
  • Does the Power of Attorney explicitly provide authority for the attorney-in-fact to do what he or she is asking to do on behalf of the Principal?
  • Is the Principal still alive and (except for durable powers of attorney) legally competent, or has the attorney-in-fact delivered an affidavit stating so, and does your state law make such an affidavit sufficient to protect the bank if it accepts the Power of Attorney and attorney-in-fact?
  • Does the Power of Attorney have any provision that limits its effectiveness such as a termination date? If so, has that provision been triggered to terminate the Power of Attorney?
  • The attorney-in-fact or agent should not be permitted to make any ownership change in an account of the Principal unless the power of attorney explicitly permits such changes. These include-
    • assuming joint ownership of an account
    • adding any other party as a joint owner of an account
    • adding or changing any beneficiary or POD beneficiary designation



First published on BankersOnline.com 10/29/12

First published on 10/29/2012

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