Power of Attorney No Good?
by Jim Martinez, President, Tri State Area Federal Credit Union
Here is a common scenario I have seen many times over the past 33 years: A member comes into my office with a Power of Attorney (POA) looking to close out the account of a deceased family member. They have always been able to transact business on the account and expect this transaction will be no different. However, there is one major difference. The POA authority ceases as soon as the principal (person who gave the POA) dies. Therefore, the POA no longer has authority to transact business on behalf of the principal. Could this issue have been addressed prior to the principal dying? The answer is quite possibly yes. So, what could the family have done differently?
We will assume that the principal was the sole owner of the account in question. So, since it is a sole owner account, it may have made sense to have someone else on the account who was titled as Joint Tenants with Rights of Survivorship (although, without survivorship may also be offered) or commonly referred to as joint owner. If this was the case, the proceeds of the account belonged to the joint account holder as soon as the family member passed. In reality, both owners would have had equal ownership and accessibility as long as they were both alive. This does not negate the possibility of the principal still granting a POA to the same individual listed on the account as a joint accountholder.
If our members decide they don’t want someone having access to an account while they are alive, they may alternatively decide to open the account as a Payable on Death account (sometimes referred to as an In-Trust-For account). In this scenario, the funds pass from principal to the family member immediately upon death of the principal. Therefore, no additional documents (other than a death certificate and identification) will be required to close the account. In this case, since there is no Power of Attorney in play, the Principal does not have someone to transact business if he/she becomes unable.
Of course, we must keep in mind the purpose of the Power of Attorney is to enable someone to transact business for a living principal when the principal is unable to. Although members occasionally look to the Internet for Power of Attorney templates, I always recommend seeing a qualified attorney if one is considering the issuance of a Power of Attorney. Why? As it turns out there are different types of Powers of Attorney (Special, General, Healthcare, etc.). Be careful and consult an attorney.
Guest columnist Jim Martinez has been in “banking” for 33 years and has been President of Tri State Area FCU for the past 20 years. He was born and raised in the tri-state area, graduated from Hoosick Falls Central School and received his bachelor’s degree at St. Lawrence University and his Master’s at Northeastern University.