Washington’s Uniform Power of Attorney Act (RCW 11.94) allows a Washington resident (the “principal”) to appoint a relative, friend or professional (the “agent” or “attorney-in-fact”) to act on behalf of the resident in the event the principal is unable to manage his or her own financial or health care decisions. In most cases, a separate power of attorney is created to address financial management and the other for health or medical decisions. Each power of attorney is labeled “durable” which means the document remains legally valid if the principal becomes incapacitated or incompetent.
In the last several years, a growing number of banks, credit unions and financial institutions (a “third party”) have decided to not honor a financial power of attorney because it is too old, the powers are too vague or too general, no proof can be offered to show the principal was competent on the date the power of attorney was signed, because of a concern that it is being used in a fraudulent manner, or, some other reason.
In this situation, it is always advisable for the agent to contact the financial institution and determine the reason(s) for the refusal. Oftentimes a resolution can be achieved and the power of attorney is honored. In 1985 and 2001, the Washington Legislature enacted laws that protect third parties, such as financial institutions, from liability if they act in good faith in reasonable reliance on a power of attorney. The third party may request that the agent present an affidavit or declaration in a form proscribed by statute that addresses the facts surrounding the validity of the document.
When a power of attorney, whether financial or for health care, is not honored or otherwise fails, the agent or attorney-in-fact may have no choice but to seek relief from the court. This is a time consuming and expensive process. This can be especially frustrating for the agent who is using a valid power of attorney to legitimately assist the principal.
There are two different court remedies that may be pursued in this type of situation: filing a petition for guardianship, and/or, filing a petition requesting the court order the third party to honor the power of attorney. Each of these court remedies has their benefits and detriments and deciding which to employ can be a difficult decision.
The guardianship process is a lengthy, time consuming matter. Various court papers must be prepared and filed, a court investigator (guardian ad litem) will be appointed by the court and the hearing to appoint the guardian may not occur for sixty or more days. The court most probably will terminate the power of attorney and the principal (now the incapacitated person) may remain under the court’s jurisdiction for the remainder of their life. The fees and costs of this process will be paid from the funds of the principal.
The second court process requests that the court compel a third party to honor the authority of an agent so long as the agent has the express power he or she seeks to enforce. This process also requires the filing of court documents and a court hearing which may be scheduled within several weeks. If the petitioner is successful, the court may require the third party to pay all fees and costs. The power of attorney remains intact and no further court action occurs.
The bottom line in this discussion is that powers of attorney, whether financial or for health care, must be comprehensive and detailed. A power of attorney with very general powers is subject to challenge and may not be honored.
Barry M. Meyers
Steven D. Avery
Elder Law Offices of Meyers & Avery