Many people make the responsible decision to draft a power of attorney document in order to transfer legal authority to someone they trust in the event that they are not able to handle their own personal and financial affairs. There are several types of Powers of Attorney, including LIMITED, which restrict the agent's authority to specific actions or periods of time, GENERAL DURABLE, which give the agent broader authority, takes effect immediately and continues until it is revoked, and SPRINGING, which only takes effect upon the disability of the principal. Unfortunately, there are numerous instances where a legal instrument that was assumed to be valid gets rejected by a bank or other financial institution. 

Often, the fact that a bank will not honor a grant of legal rights is only discovered after the person who created the power of attorney is no longer capable of making a change. With that in mind, you should know what steps to take in order to be confident that your power of attorney will be enforced if warranted by the circumstances. Ways you can safeguard your legal instrument include the following:

• Know what your financial institution requires — Some banks use their own power of attorney forms. These documents provide valuable insight on the specific information that they require. It’s wise to ask if they have an example your lawyer can review as you develop your comprehensive power of attorney. 

• Update your document regularly — Financial institutions may refuse to honor a power of attorney if they consider it "stale," meaning it was executed too long ago. To avoid this issue, consider updating your POA every few years. 

• Use clear language — A springing power of attorney only becomes effective upon your incapacity. While this can provide peace of mind, it may also complicate things for financial institutions, which might have rules as to what qualifies. If you choose a springing power of attorney, make sure that the document clearly defines the conditions under which it becomes effective and that any required medical determinations are easily obtainable.

• Work with a knowledgeable attorney — With strong guidance from an experienced lawyer, preparing or updating a power of attorney is usually a straightforward process. At Parsons & Nardelli, we will see that your legal instrument conforms with New Jersey law and accurately reflects your wishes. We can also assist if specific language is necessary to confirm that your financial institution will enforce the terms set forth in the document. 

Don’t hesitate to put a valid power of attorney in place and don’t put your loved ones at risk by creating a document that your bank will reject. You can rely on us for thorough counsel on developing a power of attorney tailored to your particular needs. Please call (PHONE) or contact us online to set up a consultation. Our office is in Red Bank and we serve clients throughout Monmouth, Ocean and Middlesex counties.