UPCOMING EVENTS

SEMINARS FOR SEPTEMBER 2017

MONROEVILLE
Tuesday, September 12, 2017
2:00PM
The Estate Planning Centers
3824 Northern Pike, Suite 801B
One Monroeville Center
Monroeville, PA 15146
Just west of Red Lobster on Rt. 22

MURRYSVLLE / DELMONT
Tuesday, September 12, 2017
7:00 PM
Holiday Inn Express
Delmont/Murrysville
6552 Route 22
Delmont, PA 15626
Behind Lamplighter Restaurant on Rt. 22

MURRYSVLLE / DELMONT
Thursday, September 14, 2017
2:00 PM CANCELLED DUE TO CONFLICT

Holiday Inn Express
Delmont/Murrysville
6552 Route 22
Delmont, PA 15626
Behind Lamplighter Restaurant on Rt. 22

MONROEVILLE
Thursday, September 14, 2017
7:00 PM 
 CANCELLED DUE TO CONFLICT

The Estate Planning Centers
3824 Northern Pike, Suite 801B
One Monroeville Center
Monroeville, PA 15146
Just west of Red Lobster on Rt. 22

MONROEVILLE
Saturday, September 16, 2017
9:30 AM
The Estate Planning Centers
3824 Northern Pike, Suite 801B
One Monroeville Center
Monroeville, PA 15146
Just west of Red Lobster on Rt. 22

 
 

 
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Power Of Attorney Is Losing Power

As I have often counseled my estate planning clients, the Power of Attorney document is a powerful tool, but not a perfect one. If the Agent you appoint to exercise authority for you under your Power of Attorney is not permitted by a bank, brokerage, title insurer, mortgage company or other institution to act on your behalf, then the Power of Attorney can be useless in that situation. As such, a Power of Attorney should remain part of a comprehensive estate plan, but the case for the use of alternative documents with greater control, such as a revocable living trust, just became even stronger.

A recent case from the Pennsylvania Supreme Court magnified the danger of a failed Power of Attorney, and created the possibility that Powers of Attorney will become increasingly difficult to rely on in this Commonwealth.  In Vine v. State Employees’ Retirement Board, 9 A.3d 1150 (Pa. 2010), issued in late December, Mrs. Vine suffered an automobile accident which led to a stroke. Her condition left her unable to communicate and understand others for a period of time. While she was disabled, her husband had her sign a Power of Attorney. Mr. Vine then made elections regarding her retirement benefits, which were authorized by the Power of Attorney document. 

When Mrs. Vine recovered, she wanted to challenge the decisions her husband had made (which had modified how she would receive her retirement benefits in a way which was better for him than her). The institution which had relied in good-faith on the Power of Attorney resisted Mrs. Vine’s efforts to undo the transactions, and relied upon a provision in the Pennsylvania statutes which provides protection to a third party who does business with someone holding Power of Attorney.

In a surprising ruling, the Supreme Court held that the institution was not protected, since Mrs. Vine did not have the legal capacity to sign the document at the time it was prepared. In a nutshell, the Supreme Court determined that if a Power of Attorney is invalid, then the protection given to a bank, brokerage or other institution doesn’t arise.  While this is perhaps a pro-consumer ruling as to Mrs. Vine, it is destined to create a world of problems for the rest of us. 

If a bank permits your Agent under a Power of Attorney to withdraw funds, or a brokerage permits securities to be bought or sold, and it turns out later that the Power of Attorney was void because you weren’t competent when you signed it, then the bank and brokerage are no longer protected from a later claim by you that your Agent did the wrong thing. If the banks, brokerages and other institutions aren’t protected, then they are even more likely to refuse to honor a Power of Attorney. As the ramifications of this ruling become clearer, one of two things will happen: Either financial institutions will stop honoring many Powers of Attorney, or the state legislature will have to rewrite the law to protect them. In the meantime, expect to see increased complaints about institutions rejecting Power of Attorney documents submitted in a wide variety of situations. 

One way of avoiding this mess is by increased reliance on revocable living trusts. I typically draft a revocable living trust to include language which the institutions need to see for them to realize that it is permissible to safely deal with the person we have selected to help us if we are disabled. This helps to assure that our affairs can continue to be managed without interruption, especially during times of incapacity when we may need that protection the most. Further, with this planning done in advance, we gain the peace of mind of knowing that a person we have selected, a person who we trust, will take care of things when we cannot do so for ourselves.

If you desire more information about the Vine case, call us or send us an email for a copy of the Court opinion.