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Monday, August 16, 2010

How is a bank power of attorney different from an Enduring Power of Attorney?

If you want to name someone to take care of your finances when you're not able to do that for yourself, you have options. Some options are more extensive than others, as you will have seen in my posts about adult guardianship, informal trusteeship and Enduring Powers of Attorney. Another choice is signing a bank Power of Attorney. By this, I mean the form you can fill in and sign at your bank branch.

There are several differences between the bank Power of Attorney and the Enduring Power of Attorney, and I'm going to look at some of them in this post.

One difference is the scope of the authority you can give your representative in your document. A bank Power of Attorney will allow you to give someone access to and authority over an account that you own in that bank. An Enduring Power of Attorney will give someone authority over all of your property, including your home, investments, cottage, etc. unless you put restrictions on it. Neither arrangement is "better" than the other; you can choose the option that works for you depending on what you need.

Another difference is that not all bank Powers of Attorney are "enduring" or "continuing". This means that if you should lose your mental capacity to look after your own finances, the bank Power of Attorney may come to an end just at the time you need it most. You would have to read the form to find out which kind you are signing. An Enduring Power of Attorney is designed to endure or continue through incapacity. Therefore if you're doing long-term planning, you should probably get an Enduring Power of Attorney.

In an Enduring Power of Attorney you can give guidance on how things are done and put restrictions of your choice on your representative. In other words, you can personalize it to make it fit you, and to make it consistent with your overall estate plan. With a bank Power of Attorney you are bound by the pre-printed details of the form.

Finally, a difference that I don't think customers fully appreciate is that you don't get legal advice when you fill in the bank form. If you make a request at the bank, their personnel will do what they can to give you the banking item you requested. They aren't lawyers. Their business is banking and it's not up to them to advise you on how signing the bank Power of Attorney might affect your taxes or your overall estate plan.

Each of these documents has advantages and disadvantages. As with all decisions with legal consequences, when you are considering either one of these documents, instead of asking "can I do this?", ask "should I do this?"

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