Keep Your Power of Attorney Problem-Free

Q: My domestic partner is disabled and is unable to leave the house. I tried to use his property power of attorney at the bank to withdraw funds to pay our common expenses and to cover some of my bills as I have been unable to work to take care of him. The banker told me that the bank account was a “Totten Trust” account and my power was not valid to access those funds. What is wrong with our estate planning documents?

A: Totten Trust and TOD or POD bank accounts are “owned” by the individual, but pass to the payable on death beneficiary of the account. Since the mother was the beneficiary of the account in question, the bank was in their right to refuse to allow the agent to access those funds, as it would defeat the interest of the beneficiary.

To solve this problem the Illinois Power of Attorney Act was revised. Effective January 1, 2007 powers of attorney could be used to access Totten Trust bank accounts. The new law provides:

Financial Institution Transactions. The agent is authorized to: open, close, continue and control all accounts and deposits in any type of financial institution (which term includes, without limitation, banks, trust companies, savings and building and loan associations, credit unions and brokerage firms); deposit in and withdraw from and write checks on any financial institution transactions which the principal could if present and under no disability. This authorization shall also apply to any Totten Trust, Payable on Death Account or comparable trust account arrangement where the terms of such trust are contained entirely on the financial institution’s signature card, insofar as an agent shall be permitted to withdraw income or principal from such account.

The new law, however, applies only to powers signed after January 1, 2007, it is not retroactive. Both you and your partner will need to sign new powers of attorney that contain this language.

Some problems that I see with old property powers of attorney are:

Is the document the statutory form that requires a notary plus a witness? Will your LGBT partner be able to pay living expenses for themselves if you are disabled but have not died? Powers should contain the authority for the agent, LGBT domestic partner, to have a limited access to funds to maintain their standard of living if they can’t work while caring for their disabled partner.

Working with powers of attorney can sometimes be a chore, especially when trying to convince others (like banks) to accept them on their face. An “old” power of attorney is more difficult to deal with than a fresh one, because a question arises as to whether it is still good or whether it has been replaced. I suggest that you “refresh” your powers of attorney every two to three years by restating them. In Illinois, the law is always changing. A periodic review of changes in the law and updating your powers of attorney are essential if you want your estate plan to continue to meet your needs.