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Why is bank demanding a Doctor’s letter for wife to use POA?

Dear Mr. Premack: My husband is incapacitated and I am agent under his Power of Attorney. Recently I placed some of our assets in a ladder of CDs. I opted to have these in my name with my husband as beneficiary, thinking this would provide protect his rights without my having to use his Power of Attorney. Using the Power of Attorney has been troublesome in the past as I have been asked to provide a “current” doctor’s authorization. Have I handled the CDs in a legal way? I am particularly concerned since I am 87 and it is possible my daughter will have to deal with this if I should predecease him. – E.K.

Ordinarily, using a power of attorney does not require any type of doctor’s authorization. Even though you did not say so, I therefore suspect that the power of attorney which your husband signed is a “springing” durable power of attorney.

Let me define the legal terms. A “power of attorney” is any document which appoints an agent, giving that agent authority to handle some type of transaction on behalf of the principal. A power of attorney can be “general” or “limited” in scope.

A general power of attorney is very broad in the scope of powers given to the agent, essentially saying, “Whatever I can do, you can do on my behalf.” A limited power of attorney is narrow in the scope of powers given to the agent, for instance saying, “You can sell my car for me.” Either way, the grant of power begins at the moment the principal signs the power of attorney document.

Whether a power of attorney is general or limited, it is only valid during a time period in which the principal is competent and could perform the particular actions which have been delegated to the agent. This a “regular” power of attorney, because it uses the default legal position (that the power of attorney ends when the principal becomes incapacitated).

In your husband’s case, and in many situations, a regular power of attorney is completely inadequate. It would give you absolutely no authority to act on his behalf during his incapacity when you most need that authority. To allow a power of attorney to continue even when the principal is incapacitated, a law was passed which authorizes “durable” power of attorney.

A “durable” power of attorney contains the statement that, “This power of attorney is not affected by the disability or incapacity of the principal” and continues to allow the agent to act for the principal even when the principal has become incapacitated. Thus the time period using a durable power of attorney is extended beyond that of a regular power of attorney. Additionally, a durable power of attorney is typically also a general power of attorney.

Now we get to the final concept. A “springing” power of attorney is a general durable power of attorney in which the time period has again been shifted. Instead of beginning when it is signed by the principal and ending upon disability (like a regular power of attorney), a springing power of attorney begins when the principal becomes disabled. It continues until it is revoked, until the principal recovers, or until the principal dies. A springing power of attorney is the polar opposite of a regular power of attorney.

Any springing durable power of attorney requires evidence that the principal is incapacitated. An elderly person’s incapacity can be permanent (like dementia) or can be temporary. Hence, you have been asked to provide “current” proof of your husband’s continuing disability with a doctor’s letter stating that he is incapacitated. That letter triggers his springing power of attorney, and is a precondition to your exercising authority on his behalf.

You ask if you handled the CDs in a legal way. Yes, what you did is legally valid. If your husband dies first, you have control over the CDs. If you die first, he gets them. If he had the foresight to include your daughter as successor agent, then after you die she can manage the funds using his springing power of attorney. She will face the same demand for a doctor’s authorization until he dies, and then she’ll need to probate his Will to disburse the funds according to his wishes.

Paul Premack is a Certified Elder Law Attorney practicing estate planning and probate law in San Antonio.

Original Publication: San Antonio Express News, June 3, 2011


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