Financial Power of Attorney

What the statutory forms cover

The Uniform Power of Attorney Act, adopted in about thirty states, defines a standard set of subjects: real property, tangible personal property, stocks and bonds, commodities and options, banks and other financial institutions, operation of a business, insurance and annuities, estates and trusts, claims and litigation, personal and family maintenance, government benefits, retirement plans, and taxes. The principal grants each subject by initialing it; one line grants all of them. Texas, California, New York, Illinois and Minnesota have their own statutory forms with the same structure.

Granting a subject incorporates the statute's definition of what that subject includes, which is why the forms look short and the statute runs for pages. An agent with “banks and other financial institutions” authority can open and close accounts, sign checks and borrow — everything listed in that section of the act.

Powers that must be granted separately

Some powers are dangerous enough that the forms refuse to include them by default. Making gifts, creating or changing a trust, changing beneficiary designations, creating rights of survivorship, waiving the principal's right to be a beneficiary of a joint annuity, and delegating the agent's authority each have to be granted expressly, usually by initialing a separate “special instructions” section. New York requires a separate signed “statutory gifts rider” for gifts above a small annual amount; Texas and the uniform act use an initial line within the form.

The agent is a fiduciary. Even with broad powers, they must act in the principal's interest, keep the principal's property separate, keep records, and avoid self-dealing unless the document permits it.

Execution rules

The signing formalities follow the state, not the form: a notary in most states, two witnesses plus a notary in Florida, New York, Pennsylvania, Connecticut and South Carolina, one witness plus a notary in Georgia, Arizona, Delaware, Illinois, Maryland and Vermont. In every state the form has to be notarized before a county recorder will accept it alongside a deed, and in practice before any financial institution will act on it.

Several states also require the agent to sign an acceptance or acknowledgment of duties — New York and Pennsylvania before the agent can act, Vermont as part of the form — and a growing number require a statutory notice to the principal to be printed at the top of the document.

Getting banks to honor it

The uniform act and the laws of Texas, California, Florida and New York all require a third party to accept a properly executed power of attorney or to state a reason for refusing within a set number of days. Banks still ask for an agent certification, a copy of the agent's ID, and sometimes a letter from the drafting lawyer. Giving the bank a copy when the document is signed, rather than when it is first used, avoids most of the friction.