Power of attorney must be obeyed
By: H. Amos Goodall, Jr.
Over the past few years, Pennsylvania made substantial changes to its power of attorney requirements.
Using a power of attorney, the a person confers the ability to act for him or her on another person (called the "agent"). Certain words by law confer certain powers that may or may not be what the person giving the power (called the "principal") wants.
Moreover, the law provides that powers of attorney do not become invalid solely because it is old, and it also makes anyone, including a bank or insurance company, who refuses to honor the authorized instructions of a validly appointed agent liable for money damages. Florida and many other states have similar laws.
Recently in Florida, a well-known national bank refused the request of an agent to withdraw funds from a jointly held account. The agent fought back in court and won a judgment, basically requiring the bank to reach into its own pocket and transfer funds that had been lost to the principal because the bank had refused to follow the agent's directions.
The principal had names his son as his agent and when he no longer wanted to manage his finances, asked his son to step in. The son became suspicious about withdrawals from an account owned jointly by the father and a friend from his retirement community.
Acting as his father's agent under the POA, the son asked the bank to transfer $65,000 from the joint account into a new account only in his father's name.
Before doing so, the bank contacted the other person named on the account. She told the bank that she did not want the funds withdrawn and accused the son of stealing his father's money and the bank refused to honor the son's request. The other account owner then withdrew all of the funds from the account and placed them in her own name. The father died several weeks later.
The son sued the bank under a Florida law that, like Pennsylvania's, imposes penalties on financial institutions that refuse to honor reasonable requests from agents named in properly executed POAa.
In November, after a weeklong trial, a Florida jury returned a verdict against the bank, awarding $64,142 to the father's estate. The jury found that the bank had not acted reasonably when it rejected teh son's request, even though the joint owner of the bank account had not agreed to release the funds.
Powers of attorney are powerful documents. They allow someone else to act for the principal and should not be used unless the principal trusts the agent.
Their wording is very important, and forms from the Internet, from books and magazines or anyone who does not know the client personally may not carry out the principal's wishes and may not take advantage of the right to seek damages for noncompliance.
Most local lawyers are well equipped to prepare powers of attorney that best meet their clients' needs.