Powers of Attorney allow one as Principal to authorize and empower an Agent (Attorney-In-Fact) to act on their behalf within the scope of authority provided in the Power of Attorney, and the law.
A person who executes a Power of Attorney does well to anticipate the foreseeable obstacles which their Agent may encounter when the Agent later tries to act on the Principal’s behalf using the Power of Attorney. The relevant obstacles vary depending on the assets and affairs involved. Let us discuss some issues that impact the acceptance of Powers of Attorney by Third Parties.
Is the Power of Attorney properly executed on its own face? Under California Law to be properly executed a Power of Attorney must be signed by the Principal (person delegating their authority) either before a Notary Public or before two disinterested adult witnesses (i.e., persons with no personal stake in the Power of Attorney).
How old is the Power of Attorney? Banks, Title Companies, and Brokerages often refuse to honor Powers of Attorney more than five years after execution. Some title companies even insist on no more than six months. The older a Power of Attorney is the more likely it is that it is replaced by a more recent Power of Attorney.
Third Parties seek to satisfy themselves that the Power of Attorney is both genuine and is still in force. Accordingly, they may require an Affidavit by the Agent affirming that the Agent is unaware of any notice of termination of either the Power of Attorney or of the Agent’s own authority.
Furthermore, a Third Party, “… may require the attorney-in-fact to provide identification, specimens of the signatures of the principal and the attorney-in-fact, and any other information reasonably necessary or appropriate to identify the principal and the attorney-in-fact and to facilitate the actions of the third person in transacting business with the attorney-in-fact.”
What type of Power of Attorney is involved? Banks, Brokerages and Title Companies are known to insist on their own in-house Power of Attorney forms and can be very reluctant to accept statutory or attorney drafted Powers of Attorney. To avoid such difficulties the Principal may choose to execute additional in-house powers of attorney at each the financial institutions where they have accounts.
What type of transaction is involved? Where real property is concerned, Title Companies require that the Power of Attorney specifically reference the real property involved, and provide the property’s legal description and assessor’s parcel number, as on a Deed of Conveyance. Title Companies will also require that the Power of Attorney expressly provide the Agent with the necessary powers relevant to completing the transaction. In fact, Title Companies are reluctant to accept broadly worded general Powers of Attorney.
Managing one’s real property, Brokerage and Bank accounts by transferring title to such assets into one’s living trust can avoid the foregoing and other obstacles associated with a Power of Attorney. The Trustee as legal owner manages the Trust assets using the powers and authorities granted under the Trust.
Powers of Attorney are still often the best approach to allowing another person or entity to manage one’s legal, property and financial affairs that exist outside of the Trust. Retirement accounts, Social Security issues, Medi-Care, and other personal legal affairs simply cannot be transferred into one’s Trust.
Lastly, if necessary, an Agent can always petition the California Superior Court to compel a Third Party to honor the Power of Attorney. With a Uniform Statutory Power of Attorney form, if the Court finds that the Third Party acted unreasonably in refusing to accept such Power of Attorney then the Court may require the Third Party to pay the Agent’s attorney fees. With all other Power of Attorney documents, fees are only awarded if the Third Party’s refusal was not done in “good faith”.