RE-POST: “In 48 Hours, I Had to Practice What I Preach”

My July 2008 blog still ranks as the most popular of all my blog posts (in terms of responses from readers and the blog click data, etc.). My 2008 blog post was in response to my personal situation at that time where a preliminary medical diagnosis – fortunately – was wrong.  But, at the urgent time I thought I could possibly die in a couple days.  I also had two children under age 10 at that time. Thus, my title of the July 2008 blog was: “In 48 Hours, I Had to Practice What I Preach”.

I am re-posting below my earlier 2008 blog, in its entirety.  The post includes ten related take-away “lesson” references. Also, as an important aside, as we and our parents, etc., all get older, the Thomas Mann excerpt in the post below from his novel The Magic Mountain remains one of the most comforting and satisfying responses to life and aging that I have found.

Here is my July 2008 post:

“Many of us in the service industry are like the proverbial cobbler (yes, including lawyers): we provide shoes with the best fit and finish for our clients, but we leave ourselves and our families poorly shod, or worse yet, barefoot.

This is an unusually personal newsletter about a recent 48-hour period in my life; it began with the complete blindside of a Friday night hospital ER diagnosis (tentatively very chilling) and a much more optimistic Monday morning follow-up.  During this long 48-hour period, my wife and I were suspended within vast uncertainty.

At that time, we believed the 48 hour-period could potentially have been my last chance to get my affairs in order. The situation caught us completely off-guard, with many loose ends in my own personal “I’ll-get-to-it-later” family matters.

I now am back in full swing and the 48-hour period is behind me; my sense of urgency no longer exists. This 48-hour period, however, strongly impressed upon me the need to stop procrastinating and get my own family affairs in order.

Although we lawyers like to believe we are the unshakeable rock of Gibraltar for our clients, I was in near-panic during this 48-hour period as I organized various topics and notes of final instructions for my life. This, quite frankly, was due to a level of worry and concern over my unfinished family business that I hope never to experience again, especially when facing my own mortality.

I share the following relevant aspects of my recent experience so as to motivate you, if you are by chance a procrastinator, to avoid a similar 48-hour surprise, or in the worst case, a situation with zero lead time.

Your Current Estate Planning Documents are Your Final Versions

As a trust and estate lawyer, I experienced briefly during the 48 hours an imagined level of after-death embarrassment; embarrassment that my wife might end up with problematic documents.  Even though I insist on updated estate planning documents for my clients, my personal estate planning documents were much more out-of-date than they should be.

Lesson No. 1 — The 48-hour period made me experience first-hand the reality of a completely unexpected event, that can effectively freeze the status of whatever estate planning documents we have in place — or fail to have in place.

No Guardian Designation for My Children

During the 48-hour period, my wife and I also discovered we did not have the updated guardian provisions that we desired for our children. This omission could potentially have been much worse than that kitchen faucet I kept promising to replace but never got around to.

Insurance Records

The permanent and term life insurance I have on my life for my family’s benefit includes certain options to allow additional payments beyond my normal premium amount without additional insurability underwriting (thus, a related increase in death benefits at my original preferred premium rate), a conversion option to a universal policy, a disability waiver if I am disabled, and the ability to extend the coverage beyond the guaranteed term.

Lesson No. 2 — I have all these excellent insurance policy options, but had failed to inform my wife about them and about the circumstances where she and my children could benefit from triggering the various options.

During the 48-hour period, I made sure my wife had the name and phone number of our insurance advisor, and made her promise that she would rely on our advisor‘s advice for assistance with our insurance situation, if needed.

Internet Access Information

The simplicity of this next point belies its importance.  My wife and I both handle a great deal of our affairs by internet. I really had to scurry around during the 48 hours to provide my wife with all of my known internet accounts: all access passwords, and other relevant information about automatic bill-pay schedules, etc.

Lesson No. 3 — My wife’s potential ability to step in and seamlessly handle all of my online business matters (banking, internet bill-pay, renewals, etc.) would have been seriously hampered, if not impossible, without the knowledge of what family business I handle over the internet, the corresponding URLs and, most importantly, the passwords.  I now keep this data in a safe place for my wife’s access, if ever necessary.

As an aside, to my wife’s credit she handles the bulk of our family bill-paying, banking, insurance, and so forth.  She is much less the procrastinator than I (but come to think of it, I don’t know where she goes online, nor what her passwords are).

Lesson No. 4 — Find out about your family’s internet business access.

Social Security Benefit Information

From a bundle of non-specific files, I dug up a copy of my latest annual Social Security earnings statement in order to remind my wife that she and my children would be entitled to survivor benefits.

Lesson No. 5 — The Social Security Administration can provide you with an annual statement of your earnings history and the projected benefits your survivors will receive.

Read the earnings statement carefully and make sure the annual earnings information is correct, as federal law applies a 3-year statute of limitations for making corrections.

Misc. Loose Ends

This seems humorous now that I am out of harm’s way, but during the 48 hours I also noted various important items for my wife’s attention, such as making sure the air filters in our furnaces are replaced every two months; making sure the homeowners and property tax payments are made on time for our small cabin in rural NC;  and making sure our annual LLC registrations are current (that I had been handling by internet).

Lesson No. 6 — Jot down this small-but-still-important stuff.

Names of Our Team Members

In the past my wife and I alone handled virtually all of our family legal and business affairs. Over the years, however, I have become smarter on this point and put into practice the benefit of having a quality team of advisors who are available to assist my family in my absence (such as for tax return preparation, investments, insurance, etc.).

Lesson No. 7 — I made sure my wife had the names and contact information for all the members of our  team.

Last But Not Least: the Name of a Good Lawyer

This next point, due to my ability over the years to be my own family’s lawyer for most matters, was a very important discussion with my wife during the 48-hour period.

Lesson No. 8 — The variation in lawyers’ judgment and expertise is as wide-ranging as is human nature; lawyers are not fungible.  I wanted to make sure my wife would have a successor lawyer in whom she has complete confidence and can feel comfortable asking questions or seeking assistance.  Because my situation is now back to normal, I can keep this name filed-away in with my personal records (to which my wife now has access).

No More Ill-Fitting Shoes

I now have made great progress in mending my cobbler ways and providing my family with the best shoes possible (figuratively speaking), sooner rather than later.  I never want to experience this 48-hour scramble again in such ill-fitted shoes.

Finally, a Comforting Consolation

Until this 48-hour incident I had not been in a hospital since my teenage years for wisdom teeth removal; I had virtually no first-hand experience with illness and hospitals.

Lesson No. 9 — Even though the 48-hour period was difficult due to my lack of preparedness for the above matters, I found my mind and spirit both adapted well – much better than I expected — to this emergency medical experience.

This adaptation is a surprising consolation and, I believe fortunately, is the way our minds self-protect us in these moments of unexpected urgency. This positive note reminds me of the following passage from Thomas Mann’s novel The Magic Mountain, that goes to the heart of this consolation:

The pity the well person felt for the sick – a pity that almost amounted to awe, because the well person could not imagine how he himself could possibly bear such suffering – was very greatly exaggerated. The sick person had no real right to it. It was, in fact, the result of an error in thinking, a sort of hallucination; in that the well man attributed to the sick his own emotional equipment, and imagined that the sick man was, as it were, a well man who had to bear the agonies of his state. Illness so adjusted its man that it and he could come to terms; there were sensory appeasements, short circuits, a merciful narcosis; nature came to the rescue with measures of spiritual and moral adaptation and relief, which the sound person  .   .   .  failed to take into account.

Excerpt  from  Thomas  Mann, The Magic Mountain 466-67 (H. T. Lowe-Porter, trans., The Modern Library Edition 1992)(1927).

Lesson No. 10 —  This is an important point.  Sufficient advance planning can help us more easily not have to contemplate or worry as much about the future. We have the future covered, so to speak. And, with the future covered, we can enjoy our lives, family, work, hobbies, much more freely in a relaxed, present state of mind.

Thank you for your indulgence.  And, finally, thank you for allowing me to share my personal experience.  I hope it might be of value to you.”

 

I Am Proud of Georgia (trust / estate law revisions)

Georgia’s newly enacted revisions to certain trust and estate law provisions bring Georgia up to speed with many other states with similar provisions.  The changes are effective July 1, 2018.  This is a good move for Georgia.  Click here for a link to the legislative bill with the numerous changes.

As an important first aside, I will blog later on how these changes add even greater benefit to my favorite trust – the inter-vivos QTIP marital trust (created during the lifetime of the spouses).  I also will provide other short blog posts from time to time with certain commentary about these law changes.

For today’s post, I include the following discussion about how long trusts can now last under Georgia law:

360-Year Trusts. The allowable duration for a trust changes from 90 years to 360 years.  This is referred to under trust law as the “rule of perpetuities”, and applies generally as a duration limitation for non-charitable trusts.  A trust can now operate for 360 years before the rule of perpetuities law mandates its termination.

However, as a practical matter, I do not think 360 years in and of itself is significant. But, now having a period longer than the previous 90-year limitation helps make sure a trust can run long enough to cover (at a minimum) the trust creator’s (settlor’s) grandchildren’s entire lives.

In other words, making sure the grandchildren get the asset protection benefit of the continuing trust for their entire lifetimes (rather than the trust having to terminate in 90 years, possibly before the deaths of the grandchildren; thus, the earlier termination removing the protective effect of the trust set-up for their benefit).

The reason I think the entire 360-year period is not significant is that the number of downstream descendants a settlor will have if his or her trust lasts 360 years will be geometrically expanded beyond anyone’s realistic ability to keep up with all the descendants. I have seen various projections indicating, on average for example, a person will have approximately 115,000 descendants in 350 years. This adds another level to the notion of “laughing heirs”.

The Delaware Tax Trap.  This point relates to the new 360-year change.  The Delaware Tax Trap is a complex part of trust tax law.  It essentially triggers potentially punitive gift and GST tax results if a trust is changed where the duration of the trust is extended longer than the trust’s initial governing rule of perpetuities.

For example, assume I created an irrevocable trust in 1980 (when the law allowed a 90-year duration which means the trust essentially must end in 2070).  Is this trust now subject to the Georgia 360-year rule?  [There are some extensions to this 90-year period that get into the notion of “lives in being”; but I do not get into that point for this blog. You also can read one of my earlier blog posts on a creative potential use of the Delaware Tax Trap.  Click here for my earlier post.]

Under this Delaware Tax Trap rule, the tax law provides that if I extend the duration of my existing 1980 trust beyond its then-applicable 90-year period, the result is that I am deemed for gift and GST tax purposes to have withdrawn the trust property and re-contributed the property to the extended-duration trust.  In other words, I am treated as making a gift to the extended trust. This Delaware Tax Trap is a very esoteric tax law concept as a practical matter, but is an issue that most trust tax lawyers have many times grappled with (and debated) in great detail as part of their trust planning.

Below is my key comment for this blog post about Georgia and the Delaware Tax Trap.

The legislative act for these Georgia revisions to its trust and estate laws states “All laws and parts of laws in conflict with this Act are repealed.” Does this mean the prior 90-year limitation disappears with no continuing effect for an existing trust?

I am merely raising the above question and have not yet fully examined the scope of an answer.  Nor does a simple, quick answer jump out at me at this time.  More broadly, the question becomes: “How best do trust lawyers deal with this new extended 360-year rule of perpetuities both for existing trusts and in creating new trusts?”

This 360-year rule of perpetuities question needs to be on every trust checklist.

Your 18-Year Old is Off to College in the Fall. HIPAA Confidentiality.

This first paragraph is the essence of this post. One of my children is now 18 and an adult for HIPAA medical confidentiality and disclosure purposes. Without a HIPAA release, no educational institution, medical facility or other personnel of any type can disclose to me — even as a parent — information, including whether or not my child is a patient at any of the random medical facilities or hospitals I call. I could potentially be completely in the dark, and upended with worry if I were to run up against this HIPAA hurdle. Without the HIPAA release, my calling simply to ask any hospital if my child is a patient there will fall on deaf ears.

[There are some extremely limited exceptions to this HIPAA constraint, but as a practical matter we all should plan as though HIPAA applies to all health and medical information.]

Now, a more expanded discussion. My 18-year daughter leaves for out-of-state college in the fall. I will MISS her, but she — for which I am proud — is developing her own strong, competent, and independent wings. As part of her continuing pathway as an adult, I had my daughter recently sign core estate planning documents, including a basic Will, a financial power of attorney, and a health care directive. The health care directive was the primary impetus motivating me to get my daughter to sign these core documents.

In broader terms, I do not anticipate problems that will trigger having ro rely on these documents at my daughter’s youthful, healthy 18-year stage in life. But, I also am well aware of the vast, difficult hurdles and challenges I would face if something completely unanticipated were to occur and I did not have these documents. More specifically, the following HIPAA element was the tipping point as to my getting these documents in place for my daughter.

Let’s assume my daughter, at college 1,000 miles away, is admitted to a hospital due to illness or an accident (let’s hope these events never occur!). We don’t hear from her for a few days; her dorm roommates and other friends do not know her whereabouts; there have been no phone texts, no Instagram, etc.  Let’s also assume we eventually learn my daughter has food poisoning to the extent she had to be hospitalized. But, where is she? No one will tell us.

However, my daughter has now designated my wife and me as agents under her health care directive. We have express authority from her for otherwise HIPAA- protected medical information. We can find out where she is much more readily and effectively, if ever necessary.

If you think this HIPAA worry is merely theoretical, then let me know if you change your mind after finding yourself in one of these worrisome, seemingly interminable, stonewall confidentiality situations. You can read a very good November 2017 WSJ piece on this same subject with reference to more examples. Click here for the WSJ link.

At a minimum, I suggest parents get a health care directive (that includes the HIPAA release) for their college-bound daughter or son before college starts. The fun college parties, beginning with fall football, start soon.

I will be glad to prepare these core documents, or you also can contact me at (470) 401-0101 if you have any questions or need additional information.

 

Avoid Derailing Your Valuable Time; Trust Delegation

My recommendation for most decisions in life goes primarily to a time question.  How much time for enjoyment does a person have, and what toe-stubs, hurdles, problems, unanticipated issues, etc., cut against this available time for enjoying life?  This time-formula does not get into the question of how one finds enjoyment (e.g., work, family, vacation, sports, music, books, hobbies, etc.), but rather focuses on what potentially derails that available time.

The central point of this post is that I recently added two new provisions to my revocable living trust expressly giving the trustee the ability to delegate both (i) the administration of the trust to an “Administrative Trustee” and (ii) the investment management for a portion or all of the trust assets to an “Investment Manager”.

Administrative Trust duties include, for example, the powers:

” (a) To maintain bank accounts, brokerage accounts and other custody accounts for the custody and safekeeping of the trust property, receiving trust income, making disbursements in payment of trust expenditures and, as directed by the Trustee, making distributions to or for the benefit of the beneficiaries;

(b)   To maintain the storage of stock certificates or other evidence of ownership of the assets held as part of the trust property;

(c)    To maintain the books and records of each trust established under this trust agreement;

(d)   To maintain an office for meetings with the Trustee and for other trust business;

(e)   To originate, facilitate and review trust accountings, reports and other communications pertaining to the trusts under this trust agreement with any Trustee, Independent Trustee, Administrative Trustee, Investment Manager, beneficiary and unrelated third parties who have a reasonable need as to that information;

(f)    To respond to inquiries concerning the trusts established under this trust agreement from any Trustee, Independent Trustee, Administrative Trustee, Investment Manager, beneficiary and unrelated third parties;

(g)    To prepare and file (or arrange with the Trustee for preparation and filing of) income tax returns for the trust and any other reasonably necessary compliance or information returns;

(h)   To execute documents as to trust account transactions; and

(i)    To retain accountants, attorneys, agents and other advisors as to the performance of the Trustee’s duties.”

These new trust revisions are also in line with the evolving greater use around the country for directed and delegated trust planning. The Trustee can continue being the Trustee quarterback of the trust, with the benefit of others handling the administration and investment management. These trust revisions also are in line with what I perceive as an exponential growth over the past few years of the complexity and choice-options we face in virtually all facets of our lives.

My revisions mean that a trustee (for example, a surviving spouse) does not have to be burdened with the entire gamut of trustee responsibilities.  Rather, in this example, the surviving spouse can delegate the administrative duties of the trust and/or the investment management of the trust assets, if he or she so desires.

Also, by inclusion of these delegation provisions in the trust document, an administrative trustee and an investment manager, if and when they accept these positions – by operation of these new trust revisions – become subject to a fiduciary duty as to the trust. This further provides protection of the trust assets, etc.

In addition, the delegation of the Administrative Trustee can be useful if circumstances arise where the legal situs of the trust needs optimally to be in another state (for example, moving the trust from Georgia to Delaware). This situs-change can be for tax and non-tax reasons.  The delegation of investment management also can help avoid investment scams, Madoff situations, cold-call / penny stock sales pressure, or simply poor, undisciplined or lack-of-attention investment management and oversight.

Finally, I understand that one reading this post might react with: “These new provisions make trust planning too complicated, with even more planning options to consider, etc.  I just want something simple.” This is an understandable response. And, there is always the available effortless option of having merely a “simple” outright estate plan, or no plan.

But, my reply to the notion of a “simple plan” or “no plan” is that these options do not avoid or eliminate the universal element that we all may face at some point in our lives. That is, upon our incapacity or death, someone will inevitably have to step in and oversee our affairs and property, etc.  This is a zero-sum game.  The question for all of us is (or will become) when, who and how?

Does a client wish now – prior to incapacity or death – to design an estate plan that gives the client input and control over these “when, who and how” factors?  Or, does the client wait and let these decisions and responsibilities fall to someone else?

The Difficulty with Retirement Accounts

Here is an important question: Who can (and will) oversee and help safeguard your tax-deferred retirement accounts? The absence of an easy answer creates the following difficulty. [1]

The point underpinning this difficulty is that the tax law does not allow ownership of a tax-deferred retirement account by the account owner’s living trust. The law allows no living trust option. Without this trust option, there can be no successor trustee who oversees and manages the living trust assets in the event of the account owner’s age-related incapacity, etc. [A qualifying trust is allowable only after the individual dies; but the point of this blog post centers on the owner while still alive.]

This lack of living trust oversight creates exposure, for example, for failing to make the required annual distributions, etc., resulting in substantial tax penalties; threats of Madoff investment scams; friends and others persistently pressing for financial handouts resulting in larger distributions from the account than what otherwise is prudent, etc.

Realistically, while the retirement account owner is alive, the tax law limits ownership either (i) in the owner’s name; or (ii) in a financial institution trustee’s name, called a “trusteed IRA”, that in most cases I do not recommend. The last paragraph of this blog refers to the unsuitability typically of the trusteed IRA option.

Due to this individual ownership option, I recommend a separate, well-drafted retirement accounts power of attorney (“RPOA”), expressly covering a broad range of specific powers for the named agent, plus with the RPOA designed to help overcome the following increasingly difficult hurdle.

This hurdle is the refusal of many financial institutions to honor a broader, more general power of attorney. This is where banks, financial institutions, etc., simply balk at acting under the directive of a power of attorney.

Why the hurdle?  Financial institutions are understandably concerned about their risks when dealing with an agent under a power of attorney (rather than directly with the principal), and the related significant pressure these financial institutions face for anti-terrorism transparency, and their need to avoid lawsuits among family members, etc. But, this institutional self-interest cuts against the interest of the retirement account owner.

The RPOA, therefore, helps balance these risks for both the institution and the account owner. And, although I can provide no guarantee these institutions will honor this specific, particularized RPOA, its detailed provisions arguably provide reasonable and substantive strength in support of the institution not so easily being able to deny the document. The RPOA might also support a position that a financial institution’s denial of the RPOA is unreasonable, potentially opening the door for damage claims against the institution.

As an aside to this RPOA situation, I am fully aware some financial institutions are mandating that account owners use only the institution’s power of attorney form. But, these institutional forms include overly-generous liability waivers with indemnification clauses favoring heavily the financial institution for its own protection; these institutional forms exist for the institution’s benefit, not for its customers.

As another important aside, below are the heading topics for the RPOA document I recommend:

  • Scope
  • Applicable Jurisdiction
  • Successor Designation of My Agent
  • Written Acknowledgment by a Successor Agent
  • Coordination With Other Powers of Attorney
  • Effective Date
  • Release and Indemnification of My Agent
  • Third-Party Reliance on this RPOA
  • Conservatorship / Guardianship
  • My Intent
  • Annual Minimum Distributions
  • Additional Distributions
  • Exclusive Power to Direct
  • Roth Conversion / Medicaid Annuity Planning
  • Checks on My Behalf
  • Spousal Roll-Overs
  • Modification / Change of Accounts
  • Naming of Custodians for Minors
  • No Power to Change or Revise Beneficiaries
  • Investment Delegation Powers
  • Tax Elections
  • Incorporation by Reference of Fiduciary Powers
  • Permitted Use of Certified Photocopies

Finally, back to “trusteed IRAs.”  Under the controlling tax law, a trusteed IRA (i) does not allow a spousal rollover for the surviving spouse and (ii) requires that the financial institution overseeing the account must be the sole trustee. I also find most often a trusteed IRA agreement locks the financial institution in as trustee after the account owner’s death, thus barring any change by the beneficiaries of the investment management platform or removal and replacement of that institutional trustee.

________________________________________________

[1] I refer to “IRA” in this blog post, but, the same discussion applies generally to corporate or self-employed (“Keogh”) pension, profit-sharing, defined-benefit, and stock bonus plans, SEPs, 403(b) plans, IRA and Roth IRA accounts, inherited IRAs, spousal rollover IRAs, 401(k) and Roth 401(k) plans, and 457 plans. It also applies to a judgment, decree or order for any retirement plan, for payment on the owner’s behalf of child support, alimony or marital property rights, referred to typically as a “qualified domestic relations order.”

What a Great Line

I am currently reading the novel A Thousand Acres (1991), by Jane Smiley.  This is essentially a modern-day version of Shakespeare’s King Lear involving a father’s disinheritance of a daughter from the family farm (a 1,000 acre farm) and the destructive effects of deeply rooted, and long denied, family issues. This novel also is a powerful depiction of estate planning discord. [There are certain tragic elements in the novel that I fortunately do not see often in estate disputes.]

One line in this novel notably jumped out at me the other evening.  It refers to one of the farmer-neighbors named Harold who, often to the humorous and bemused talk of the other neighbors, marches to the beat of his own drummer, but who also is one of the most successful farmers in the community:

Here is the line referring to Harold:

It’s just that he’s [Harold] cannier and smarter than he lets on, and in the slippage between what he looks like and what he is, there’s a lot of freedom.

This line is powerful.  In contrast to Harold, many people are much too concerned about what others think about them. These people stifle their own freedom.

A tie between the above line and this blog post is that my great joy in lawyering is helping clients respond to the currents of life from a position of strength, power, and independence. Independence particularly in terms of having control over their lives, including preventing legal issues, disputes, litigation, not bowing easily to the expectations or judgment of others, and avoiding the time- and emotionally-draining interference and overreach by others.

In one of my earlier blog posts, captioned “Helping Clients Have Power;  Blog Post 2 of 3” (click here for this earlier post), I referred to two of the saddest characters in literature: Willy Loman in the play Death of a Salesman (Arthur Miller) and George Babbitt in the novel Babbitt (Sinclair Lewis). Each of these characters demonstrates so powerfully the sad, unhappy mistake of maintaining such a persistent, engulfing concern about what others think about them. The complete antithesis of power.

Finally, one ancillary legal point.  Liberty is the environment that (fortunately) allows us to be free;  Actually exercising our freedom in the above context is our own responsibility.

Just Say “No” to Financial Institution Intrusion into the Financial Power of Attorney Arena

I increasingly get calls from clients who are concerned when they run into the following situation.

The financial institution where the client maintains an account tells her she must use only that financial institution’s power of attorney form, rather than her own power of attorney.

Furthermore, if the client stands firm on using her own power of attorney, some financial institutions will thereafter attempt to mandate that she (or the agent named in her power of attorney) sign an additional institutional form that operates as an overlay for the client’s own power of attorney.  This overlay form is captioned along the line of “ABC Bank Attorney-in-Fact Agreement and Affidavit for Non-ABC Bank Power of Attorney.” This form gives the misdirected impression the client can now freely use her own power of attorney, without the institutional power of attorney form.

The above ostensible “must” also sometimes includes the institution telling the client that its legal department will have to review the client’s own power of attorney. This often is where I get the phone call from my client.  And the word “must” generally never sits well with me in many situations.

So, just say “no” to the above institutional power of attorney forms. “No” to all of the forms. Stand strong with a persistent “no” and inform the institution you will use your own power of attorney, without signing any additional institutional forms dealing with the power of attorney.

So, why do I strongly recommend against these institutional forms (including the above overlay “agreement and affidavit for non-ABC Bank power of attorney”)? Because these forms in most cases include features that are targeted to benefit the financial institution, not you.

Among the key institutional form features are:

  1. The agent must agree to indemnify the financial institution against a broad range of items;

  2. The institution’s form mandates what specific state law controls, which might be a state other than the principal’s home state.  Or, a state other than where the agent lives, etc.;

  3. The form requires an agreement to arbitration for issues that arise with the power of attorney.

Also, back to the above legal department mandate. Don’t be alarmed if the financial institution runs your power of attorney by their legal department. Just give them a pdf or photocopy for that purpose. I have had these run-thru-the-legal department situations occur numerous times with no negative consequences. And, with my clients not thereafter signing any of the institution’s forms.

And, quite frankly, if I am an agent acting for my principal under a power of attorney and my principal, if incapacitated, cannot weigh in on these institutional form requests, I (as the agent) likely do not have authority to agree to the institution’s mandate without some preexisting agreement or discussion with my principal. This is likely a reason financial institutions are now pushing these power of attorney forms on their customers as early as possible.

In order to help give you the strength to say “no”, I recommend you make sure you have an updated, comprehensive power of attorney in place that you can point to when you push-back against these financial institutions.

Also, as an important aside, in Georgia the statutory provisions for having a power of attorney under O.C.G.A. Section 10-6-140 state expressly that the Georgia statutory form power of attorney is not the exclusive method of creating the agency.

Therefore, Georgia law acknowledges use of either a Georgia statutory form power of attorney or your own format of a power of attorney. I have not seen the above financial institution mandate tested fully against the backdrop of Georgia law, but my view is an institution will be hard-pressed to succeed with its own-forms mandate against the existence of these Georgia statutes.

Finally, the New York Times had a good piece last year (May 6, 2016) about this same power of attorney push-back from financial institutions. Click here for the link.