After you establish an estate plan, you will likely have two documents that others may need to rely on. The first is the Power of Attorney and the second is a Certificate of Trust. Both of these documents need to be relied upon by others.
Often times, it is ignorance or laziness that causes problems with people accepting documents. We recently had two clients which had issues with a large bank accepting their documents.
Certificate of Trust
The first client had a revocable living trust and took the certificate of trust into the bank to have their accounts added to the trust. In California (as an example), this issue is actually addressed by statute, which is often included in the Certificate of Trust.
RELIANCE ON THIS CERTIFICATION
This certification is made under California Probate Code Section 18100.5 and California Commercial Code Section 8402(a)(2)-(5) and is signed by all the currently acting Trustees. Any transaction entered into by a person acting in reliance on this certification is enforceable against the trust assets.
PROBATE CODE SECTION 18100.5(h) PROVIDES THAT ANY PERSON WHO REFUSES TO ACCEPT THIS CERTIFICATION IN LIEU OF THE ORIGINAL TRUST DOCUMENT WILL BE LIABLE FOR DAMAGES, INCLUDING ATTORNEYS’ FEES, INCURRED AS A RESULT OF THAT REFUSAL, IF THE COURT DETERMINES THAT THE PERSON ACTED IN BAD FAITH IN REQUESTING THE TRUST DOCUMENT.
The resolution was simply informing the personal banker of the consequences.
Power of Attorney
The second issue occurred when our client needed to be added as power of attorney to an additional account at a bank. Our client visited (a different branch) and they did not want to accept the power of attorney. What made this more frustrating for the client was that the bank had accepted the power of attorney before, but would not accept it this time without speaking to the clients mother. While this sounds like a simple issue, the clients mother is unable to answer the identifying information for the bank to satisfy the bank that they were really speaking with our clients mother.
Bank employees are not typically familiar with legal documents and many bank policies encourage using their own internal forms to ensure that it provides the power over financial accounts, because they know their employees are not familiar enough with documents to ensure their validity. Banks also typically have a legal department that can review other drafted legal documents to ensure compliance.
The client has a valid power of attorney for her elderly mother. The bank had actually already accepted the power of attorney before to add our client to her mothers bank accounts, but that was added in the presence of our clients mother, so the bank now refused to accept the power of attorney.
In the conversation with our client, we reminded her that the purpose of the power of attorney is to allow you to legally assist her mother, because she is incapacitated. It is a legal document that is properly drafted and she has the legal authority to act on her mothers behalf.
Once the client returned to the bank, and pushed back a little, explaining the important facts (valid power of attorney, they have already accepted it, and the clients mother is unable to properly identify herself), the banker submitted the power of attorney to the legal department and the issue was resolved.
You are likely far more familiar with your documents than the bankers that you take them to (especially if you went to an attorney to have them drafted). Bankers are primarily trained how to sell and how to open accounts, not how to review legal documents.
When you are certain that the documents are actually correct, educating the banker and (politely) encouraging the banker to look for solutions rather than simply saying “no” can often resolve the problems. If all else fails, try to escalate the issue to management, and they may be more familiar or see if your attorney can help resolve the issues.