A power of attorney for financial management is a document that names someone that you know and trust to manage your assets if you cannot manage them on your own in the future. That person is called your “agent” or “attorney-in-fact”.
Limitations of Powers of Attorney for Financial Management in California
There are a couple of limitations you should be aware of when it comes to powers of attorney for financial management:
- Title companies often do not want to be involved with them; and
- Banks and other financial institutions often require their particular form of power of attorney.
Title Companies Often Do Not Want to Be Involved with Powers of Attorney
First, title companies do not like to issue title insurance for real estate sales conducted through powers of attorney. Most real estate purchasers want title insurance because it protects them if the seller does not actually have ownership title to sell the real estate.
Therefore, having a power of attorney for financial management may not help if you want the person you named to be able to sell your real estate for you.
Banks and Other Financial Institutions Often Require Their Specific Form Power of Attorney
Second, many banks and other financial institutions will not honor a power of attorney unless it is printed as the specific form created by that bank. For example, if you have an account at Big Bucks Bank, the bank may refuse to act based on the instructions of your agent unless you named the agent on a power of attorney form created by Big Bucks Bank.
A General Power of Attorney for Financial Management is Needed Even if You Have a Power of Attorney of a Specific Financial Institution
It’s still very important to have a power of attorney for financial management prepared by a lawyer for handling your other financial issues. The power of attorney form of one bank won’t help you with anything except the your accounts at that bank. When you sign a power of attorney prepared by your lawyer, you will go to each financial institution where you have accounts titled in your name, and sign a power of attorney on their form. It makes sense for the people named in the power of attorney to be the same people named in the power of attorney of the financial institution.
A Trust Overcomes Both of These Limitations of Power of Attorney
Fortunately, neither of these two limitations of a power of attorney for financial management exists with a trust. These are two good reasons for having a trust. In addition, a trust avoids the effort, expense, and time delay of a probate decedent’s estate court proceeding after your death or a conservatorship court proceeding if you become unable to manage your finances and assets in the future.
Contact Meinzer Law Firm, P.C., in Torrance to assist you with your estate planning. Have someone that you know and trust to handle your finances and assets if you are unable to in the future.
