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During the course of my career, I have represented a number of individuals with their estate planning and Medicaid planning matters. During that course of representation, we have utilized documents called Powers of Attorney for Property, or also referred to as Powers of Attorney for Financial Affairs. This power of attorney document authorizes a friend or family member to act on your behalf in various financial matters. For example, that power of attorney can make deposits to your checking account, write checks on your checking account, and make other various financial transactions for you.
Over the course of the last few years, it has been very common practice for various third-party institutions to reject powers of attorney that are lawful under Ohio law. For example, I have had a number of clients who have contacted our office after they have been informed that the power of attorney that we created is not valid at their financial institution for various reasons. These various reasons have included that the power of attorney is too old, that the power of attorney does not have indemnification language that the third party institution would like to see in the power of attorney, or the institution does not recognize powers of attorney when more than one individual has to act together. Of course, all of these factors are not factors that would make the power of attorney unlawful in the State of Ohio. We have tried to work with the various third-party financial institutions to come up with another way to satisfy their requirements even though their requirements were more stringent than the Ohio law. Most of the time, we have been able to come to a resolution with the third-party institution. In some cases, this has become a real burden on the client.
Recently, a bill has been introduced in the Ohio House of Representatives which will hopefully correct this growing problem of third-party institutions not accepting valid Ohio powers of attorney. This proposed new law would prohibit a third-party institution from rejecting a power of attorney that has been acknowledged and/or require additional or different information to be included in the power of attorney which is not required under Ohio law. Under the proposed bill, if the third-party institution does not accept the valid, acknowledged Ohio power of attorney, then they will be subject to various penalties.
Therefore, generally speaking, the third party institution would have to rely on the power of attorney that had been notarized unless any of the following applies: 1) the institution has actual knowledge of the termination of the agent’s authority or of the power of attorney; 2) the institution in good faith believes that the transaction is outside the scope of the authority granted to the agent in the power of attorney, or 3) the institution in good faith believes that the power of attorney is not valid. Once again, a failure to comply with this proposed new law would result in sanctions for the third-party institution for refusing to accept the power of attorney. In my opinion, this is a bill which is much needed. We will continue to monitor its progress throughout the Ohio legislative system.
NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.