The Power of Attorney – A Banks Sum of All Fears

Banks live in fear. Things have not gone well for them in recent years, and so even the slightest amount of risk leads them to declare all sorts of reasons why they cannot provide service the way their customers need them to when they are unable to bank for themselves. No where is this more pronounced than in their response to a durable power of attorney executed by a depositor, a principal, in favor of the attorney in fact, or agent.

The idea behind a “durable” power of attorney is that your elect to hand to someone the authority to manage your affairs should you become incapacitated, but before you die, which is when your Last Will and Testament becomes effective. This can avoid an expensive guardianship.

Here is a sample of the gymnastic reasons given not to honor these documents:

1) This document is only a copy. My client was in a coma. I presented my copy to the bank one day to allow my clients brother to get to the money in the bank so that same bank could have its mortgage paid. The young man in the lobby looked at the notary crimp and saw it wasnt raised, so rejected it. I drew my notary crimp out of my briefcase, crimped my signature on the same copy, and handed it back to him. We were allowed access to the money. Apparently that made it an original.

2) The references are to bank accounts generally, not our bank. My remedy is to start incorporating the names of the depository institutions into each power of attorney I draft. Older forms do not take this step, which has now become part of the practice.

3) Our bank is referenced, but not the bank account number. So you can put the account numbers down, but this is risky. What if they fall into the wrong hands? Generally we have started putting at least the last 4 digits down, or all of them if the client approves.

4) If you take money out of the account to pay your principal’s bills, that is an estate planning transfer because all this money is designated to go to someone else when the account holder, your principal dies. You are not authorized by this document to make estate planning transfers. While I have begun drafting around this claim, this dodge underscores the duplicitous absurdity of banks claims in recent years. Does this mean that every time a depositor writes a check he is mindful of the impact on his estate?

5) We honor durable powers of attorney, but only the one we drafted, and your principal hasn’t signed this yet. Please have him sign our form then we will allow you access to his money. Right. The principal cannot sign checks competently now, that is why the agent is there, so he cannot possibly sign a new power of attorney the institution drafted. It’s madness, isn’t it?

In Washington we have a statue that allows us to threaten to sue the bank, and sue and recover attorney fees if they fail to honor these documents in good faith. I think they probably have a right to demand the original, or at least some proof the circumstances suggest the copy is a true and correct version of the original but the rest deserve a stern letter from the lawyer.

The best defense against this nonsense is to develop a relationship with the people in the bank lobby between yourself as principal and your agent well before that day you are not able to go to the bank yourself.  Develop trust in a non-threatening environment, put in time reducing the banks fear, and normally this should pave the way to avoid guardianship and a peaceful disposition of your affairs in later life.


J.R., Sue Ellen and the Sanitarium

If I remember the 1980’s correctly, there was a nighttime soap opera called “Dallas” where the women were beautiful, the men tore their ties from their necks when upset, and there was a lot of money.

There was also a lot of fiction. I recall not who shot JR, but that JR did a lot to deserve being shot. For example he constantly was threatening to put his wife, Sue Ellen, in a sanitarium. I am not sure what a “sanitarium” is in Texas but I suspect it is a home for the mentally ill.

For  us here in Washington State, 30 years later, we can rest assured that marriage alone is not a basis to have one or both members of the union committed. Normally the rules call for the least restrictive alternative for those declared to be incompetent. This unfortunately is not always in the best interest of the incapacitated.

I recall a Judge deciding an elderly lady could be granted her wish, and return to her home so long as supervised 24/7. The caretaker turned her back after the lady appeared to be asleep, only to have her rise, trip and fall to her death on a bed knob. I tore my necktie from my shirt when I heard.

Powerless Power of Attorney

The time is present day. The situation is your surviving parent has entrusted you with the role of attorney in fact in a power of attorney he had drafted for him years ago by his long time entrusted attorney, or worse, a form he did himself. Dad is in a nursing home, and that nursing home is demanding payment. You go to the bank where you know he has saved money for this point in his life. You present your identification, and the durable power of attorney which was duly notarized and appears official.

The bank will not give you the money. Much like a car salesmen discussing price, someone in the back room, normally described as “Legal” denies the document is adequate to access the funds. Most of the time “Legal” isnt on the premises, and instead is days from reviewing then rejecting your document.

This is the everyday occurrence of the adult child of elderly parents find themselves in. The remedy is usually an expensive guardianship the durable power of attorney was meant to avoid altogether.

Generally I disagree with the bank, but that doesn’t count for much.

More often the best defense is an active offense. What you want to have had before this point is a lawyer who has actually had the experience of finding what works and what doesn’t work with banks since the apocalypse banking crisis in 2008. Often it is just a matter of naming them directly in the document, but you can’t do that now because Dad isn’t really able to know what he is signing. I am afraid this is something you hope the trusted lawyer knew. Sometimes it is a good idea to visit the bank and develop a relationship with the people in the lobby with your parent along with you well before any of this happened.

Sometimes none of this works, and it is time to ask the trusted lawyer what he knows about guardianship.



It’s Not Your Money

Sometimes even the most seasoned lawyer is shocked by the conduct of people, often those in their own family.

I am just fresh from the probate and guardianship calendar where I witnessed an institutional trustee, a bank no less, hand up an order approving expenditures from a child’s special needs trust that was rejected immediately by the bench.  Instead our Court had lots of questions about why it was necessary to spend in increasing amounts tens of thousands of dollars taking the extended family on fabulous trips to Mexico and the Caribbean.

Meanwhile the needs of this special needs child who apparently had been left quite a bit of money in a will seem to be glossed over.

The really remarkable thing was the bank seemed unphased by this spending. Usually I see this kind of conduct from individuals named as trustee, because the term “fiduciary” is not part of their lexicon. Webster defined fiduciary as one who holds the trust or confidence of another. The first known use of the term is from 1641, and derived from the Latin fiduciarius which sounds a lot like fidelity to me.

I wonder what the Latin is for “taking advantage of the helpless”? And what about the bank, what Latin term can we assign them? There is no Latin term for “clueless”.

True Stories from the Twilight Zone Part 2

Modern medical science is a wonderful thing. I have witnessed with my own eyes how one can be suspended between life and death in that places Rod Sirling used to call the Twilight Zone. Sometimes however we just age into that place of time and space the rest of humanity calls “dementia”.

In this state your Will does not help you. It is a “dead letter” until you yourself are dead, then zombie like the Will comes to life.

So what do we do in the Twilight Zone? Once there, you are not competent to sign anything that anyone will recognize. Instead someone, often a family member launches a guardianship proceeding. This takes at least two lawyers and the associated cost; one to file the petition and one appointed by the Court to act as your guardian ad lietum.  If in your demented state you declare you are not a danger to yourself financially or physically a third lawyer is assigned and we may end up in trial.

I have been such a third lawyer. Even though it was clear my client was hearing only the signature strings of The Twilight Zone we spent a day in trial. Washington’s guardianship statute does not give the third lawyer the latitude to concede defeat, he must go to trial.

And so on a sunny day in early May I spent my time in trial with my elderly client who wandered around the courtroom during the proceeding, hollering things like “There is the Judge, on his Altar!”. ( Some lawyers I know might say my client wasn’t so demented after all.)

The cost of all of this was well over $10,000 to the client. The experience: priceless.

The take away from all of this is there has to be a better way. Is there not a means to convey to some trusted person or people a means to handle financial and health care decisions when you cannot? The short answer is yes.

1) Durable Power of Attorney. The power of attorney means you hand someone else the authority to work for you in your place. It is “durable” because it survives your incapacity or dementia. Otherwise if not referred to as durable, the law says that paper lapses because you are no longer able to revoke it when you are in the Zone.

This document can be effective immediately, leaving open the chance someone might use it a little too early, or “springing” taking effect when you can find a doctor willing to say in writing you cannot handle your affairs any longer.

The revocation and reassignment of this authority as dementia approaches is the stuff of legend in my business, leading to that court fight and perhaps guardianship you tried to avoid in the first place.

2) Care Managed Trust or Revocable Living Trust. This device allows you to put into your own hands as Trustee then the hands of a trusted person as the successor Trustee all your property. It can also take the place of your Will. It is not a “dead letter” as you enter dementia but instead is very much alive and continues to operate as you pass from the Twilight Zone across the Great Divide. It can avoid probate.

I have yet to see one of these instruments come into the office that has not been terrifically expensive to set up, maintain, and in the end, doesn’t have all the property transferred to it, necessitating a probate of the left out property.

All kinds of things happen in the Twilight Zone. The best you can do is make some judgments ahead of entering that dimension of time and space, decide to trust or not to trust, and then live the rest of your life.

Patrick Henry and the Special Needs Trust

We The People,  now have a segment population who would otherwise pass away naturally due to birth defects or accidents but for the advanced medical care in America. In legal parlance we refer to this segment as “disabled” and having “special needs”. Because we sense a  duty to these folks we tend to leave them money in our wills because we think they will need it after we pass.

That sounds good but it has to be done right because the government is already there doing the same thing. It’s sort of their territory so you have to play by the governments rules if you want to add to the support. A person unable to provide for himself may qualify for SSI, or a supplemental income from social security regardless of whether they have ever had earnings that would pay into the system. This stream of benefits long-established and part of a structure can suddenly be undermined by an inheritance or gift to the child not otherwise funneled into a legally recognized catch basin called a “special needs trust” or “supplemental needs trust”.

Often, in my experience, the parent hangs on to the disabled child far into that child’s adult life, the parent ages naturally and one day dies. There is no special needs trust, but more important the lack of that estate planning process also  leaves no one really available who knows what the needs of the disabled adult are, what he or she likes, what makes them upset, what their medications are and what kind of food they tolerate. That is a dramatic definition of crisis.

Properly drafted, the special needs inheritance then exists side by side with the money we have already paid into social security to shelter and provide health care for these people. Without it the government pulls back, and in a short time the money that is inherited by the disabled person is used up, and we better hope there is a guardian or other caring person left alive to make sure the benefits of social security is sought again. Otherwise we have the disabled person exactly where we feared they will be; alone and unable to survive independently.

It has been a long time since 1775 when Patrick Henry declared he would prefer death to a loss of Liberty. People like my daughter Amy would not have survived infancy to acquire the kind of liberty Henry wanted at the time. Today liberty for Amy is death.

Born profoundly mentally and physically disabled, Amy resides in a state-run facility in Shoreline Washington called Fircrest School. The other residents there are quite a bunch. Going there to visit or retrieve her for a weekend one has the same reaction one might have entering the Star Wars bar. There are a lot of this segment of The People that look only vaguely human and can make you feel uncomfortable. They make all kinds of noises and require bits of blinking machines to be fed or otherwise maintained.

The music is turned up loud enough so “all the residents can hear it” and the television is always on. This sounds terrible, but for these folks there is a comfort level there, it means they have something to do all day. The truth is the staff is first rate, and care about our family members there.

It’s the outsiders that pretend to know what Amy and her cohorts need, based largely on film or other fictions. There is something  in the myth every American believes and protects that includes the theory that no matter how disabled, an American has rights that have to be protected; those rights are identical to those Thomas Jefferson wrote about before any of these people could have survived infancy and therefore these rights we have to be pressed upon this population, even if it kills them.  This is the ostensible claim of those outsiders who really dont know what they are talking about but have a lot of education on political theory might conclude. Or they have seen too many movies.

Far from the common perception that the people residing there have been dumped by their families the reality is that parents as they age need to have a plan for these children as they mature. That includes a care arrangement that will survive the parents as well as an estate plan that ensures maximum financial assistance for the disabled adult during their lives.

The testamentary trust is called Special Needs. The needs are special, different than ours, and we do that population a disservice to read our own expectations and desires into theirs.  The disservice is greater when we leave them money without a proper plan.


It is called a Trust, but should you trust?

How much of my practice is suing trustees who clearly should have never been trusted? A lot.

People often want to have some control over their money after they die, designating particular purposes for which the money is to be used. To do so one needs a “Trust”. The person holding the money is called a “Trustee”. The Trustee pays the money where the Trust directs it is supposed to go; normally to people or charities called “Beneficiaries”  according to what the person making the Trust, called the “Settlor” has designated.

Because a Settlor perceives that nephew or child really understands money and has the character to do the right thing and follow his post mortem instructions in the Trust, they name him as Trustee. The general perception is the bank or some other professional fiduciary will be expensive. While it is true banks and professional fiduciaries do charge fees, often more than the person making the trust would like, it often pales in comparison to the damage the nephew or child can do when it turns out that Trustee isnt really good with money, or just doesnt do the right thing.

Years after the Settlor has died the Beneficiaries show up in my office wondering where the money has gone. I will tell you where it has gone. Often to a place called “The Casino”. Or the money has been invested in the business of the Trustee himself. These things would not happen if the bank or professional fiduciary was handling the money. Rather than the money going where the Settlor designated or perhaps earning something called  “interest” or “dividends” or otherwise increasing in value,  the losses are dramatic, making the fees of a bank look like a bargain.

Money invested in the Trustee’s own business, or even borrowed by the Trustee is called “self dealing”. Money from the trust spent at the casino is called “theft”.

The really remarkable aspect of these events is the Settlor has worked his whole life to build this estate, then potentially throws it away by chosing a Trustee that may or may not do the right thing, act like a prudent investor, or otherwise take on the task of managing the trust.

We see this in guardianship often as well, when the incapacitated person is fleeced even by a court appointed family member. Yet most of the complaints I hear is about the fees of a professional guardian appointed  when no family member appears suitable. It is as if the Settlor of the Trust and his family would rather see the money squandered rather than pay someone unrelated to manage the money with competence.

I am still puzzled by the phenomenon.

OK that’s enough for now, I gotta go.