While alive, we sometimes cannot or do not want to make our own decisions. The reasons for this could be a medical condition such as early onset dementia, a neurological change due to an accident or a change in medication. Additionally, convenience or availability can make naming an agent to make decisions for us very useful in the future.
If someone is unable or unwilling to make decisions, the only way that someone else can make their decisions is if that other person has been empowered to do so by a local probate court or through a written power of attorney signed by the person giving the authority (the principal).
Court appointment of people to make decisions for others is called guardianship. Guardianships can be cumbersome and expensive, but they may be the only available tool if someone is mentally unable to make decisions and had not previously signed powers of attorney.
POAs typically follow two formats. One format is used for healthcare decisions. The typical healthcare POA in Ohio is based upon a form created by the Ohio’s attorney, doctor, hospice and hospital trade associations. The forms are standardized but include numerous possible adjustments to define the scope of the authority granted and clarify instructions to agents.
The second POA format covers almost all decisions that are not related to healthcare and is often called a financial POA. Financial POAs usually follow the literal word-for-word POA format that is set forth in the Ohio Revised Code. Financial POAs usually include the ability to make financial and business decisions and actions, such as opening bank accounts, paying bills and renewing insurance policies.
Ironically, Ohio law does not require banks, businesses and investment firms to honor POAs that are prepared based upon Ohio law.
Because of not having to honor the standard form, many banks, businesses and investment firms have their “own” forms, which they require be used instead of the format set forth in Ohio law.
Usually, those third parties’ stated rationale for requiring their own power of attorney forms is due to concerns regarding their being liable for some reason, and that can be a legitimate concern. However, sometimes that rationale is simply a cover story.
For example, a bank may have a relationship with my dad. The bank may have nurtured that relationship with my dad over decades in order to keep my dad’s business. However, if my dad names me as his agent, I personally may have a stronger relationship with another bank.
Thus, some businesses view POAs as threats to relationships with customers. Therefore, those businesses may require the use of their own POA form in the hopes that when my dad signs that business’s own POA, my dad will mention to me the value of his relationship with that bank.
Almost unbelievably but consistent with the example above, a certain investment company does not accept any written powers of attorney and instead demands that the principal literally appear in front of one of their investment advisors to sign their POA form.
Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at Lee@LeeSchroeder.com or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.