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A Durable Power of Attorney is an important estate planning tool that allows whomever you name in the document to act on your behalf and manage your affairs, even if you are incapacitated. A power of attorney can be effective immediately upon signing or can "spring" into effectiveness upon your disability.

Financial institutions have become sensitive to potential liability for power of attorney abuse, whereby a power of attorney is secured under suspicious circumstances by the agent and/or used for the agent's own personal benefit. Agents and their attorneys or advisers should consider the following questions about a power of attorney document:

Is the agent specifically authorized to take the desired actions? A financial institution may be "within its rights not to permit the attorney-in-fact to take a requested action unless the specific authority to take such action is included in the power of attorney." Accordingly, some shorter-form powers of attorney may be insufficient.

Will the agent's authority be restricted? For example, some financial institutions, as a matter of policy, do not allow agents online access to the principal's accounts even if the principal did their banking online. Financial institutions will, quite reasonably, be extremely reluctant to add an agent as an account owner or change pay-on-death designations.

Is the power of attorney still in effect? Financial institutions may be wary of old power of attorney documents, or those signed in other states, and may require the agent to sign an affidavit of some kind warranting that the document is in effect, such as this form from Fidelity.

Was the power of attorney validly executed? The financial institution will probably want the document to be notarized, even if not required by law, to give it some assurance that the principal was competent when signing. An agent purporting to act for an incapacitated principal may be questioned if the document was signed very recently. Thus, the document should not be too old or too new. Finally, many financial institutions will require an original document, rather than a copy. Keeping the foregoing questions in mind will help ensure that a power of attorney is honored by third parties.