A power of attorney allows a principal, the person creating the power, to appoint another as his or her attorney-in-fact to make certain decisions on behalf of the principal related to financial and property matters. Powers of attorney are an important part of one’s estate plan and can be especially useful if the principal should become incapacitated; this is known as a "durable" power of attorney. It is important to note, though, that powers of attorney cease upon death of the principal.
Powers of attorney vary depending on state law, and Minnesota has its own rules that delineate the requirements necessary for executing a power of attorney. A valid power of attorney must be written, signed, and dated by the principal in front of a notary. Minnesota, however, also gives principals the option to use a sample form known as the Statutory Short Form Power of Attorney.
The current Statutory Short Form Power of Attorney was updated in 2014 and provides certain benefits that older powers of attorney, while still valid, do not. For example, Minn. Stat. §523.20 makes any third party who refuses to accept a valid Statutory Short Form Power of Attorney liable to the same extent the third party would be liable to the principal for refusing to let that principal act on the principal’s own behalf. This can be helpful with institutions who may have offices located in Minnesota, but headquarters or main offices located out of state; they may not be aware of the liability they could face if they refuse to accept a valid Statutory Short Form Power of Attorney.
It is becoming more common for large, national institutions to insist that attorneys-in-fact use the institution’s form instead of accepting the Statutory Short Form. In some cases this may not be an issue to have the principal fill out a new form, but it can be much more complicated and tedious in certain situations, especially when a durable power of attorney is involved and the principal has become incapacitated.
So, what are your options when a third party refuses to accept a validly executed Statutory Short Form Power of Attorney? First, you can attempt to contact that institution’s legal department or someone who may have more experience related to powers of attorney and the statutory language involving third party liability. It is common at these institutions that you are initially dealing primarily with a custodian of a financial account; while that person has expertise in his or her particular area, he or she may not have much experience with Minnesota state law and may prefer to adhere to the company policy that has been outlined for him or her. If you feel more comfortable having your attorney speak on your behalf, this can be helpful as well. A simple letter on the attorney’s letterhead outlining the law may even do the trick.
There are some scenarios, though, where nothing seems to work, and the institution still insists on using its own form. In these instances, the attorney-in-fact needs to weigh the hardship of executing a new power of attorney on the institution’s form (which may be impossible depending on the circumstances), the necessity of the action the attorney-in-fact is trying to take, and the cost of litigation incurred to impose liability upon the institution for non-acceptance. Often, an agreed-upon solution can be reached without having to go to court, but it is important to involve a skilled attorney immediately when you feel you are unable to reach the desired outcome alone.
To learn more, contact Boulay at 952.893.9320 or learnmore@BoulayGroup.com and ask about our estate and trust services.