You encouraged your aging loved one to execute a power of attorney (POA) document. You worked together to plan for the unexpected and thought you had your ducks in a row. Now your loved one has become incapacitated and the bank is refusing to give you access to his or her accounts. How is it possible that the bank can do this if you have been legally granted financial power of attorney?

A recent article in AgingCare explored this scenario. Here are some of the key takeaways, beginning with the three most common reasons a bank might refuse a POA.

The POA is not durable

If the POA appointing you as agent is not "durable" it will only be valid while your loved one (the principal) is of sound mind. A durable POA, on the other hand, continues to be effective after the principal becomes incapacitated and can no longer manage his or her finances.

The POA is "springing" and has not been activated

If a POA is "springing" it will only become effective when the principal becomes incapacitated. In this case, incapacity must be proven according to the terms outlined in the POA document. A generic springing POA will typically stipulate that at least one doctor has examined the principal and determined that he or she is unable to manage financial affairs. In such a situation, the bank will want to see the POA, together with the doctor's letter(s) and any other documents necessary to satisfy the requirements for activating the POA.

The POA is "stale"

A bank may refuse to grant access to your loved one's bank accounts simply because it deems the POA "too old." The legal concept of "staleness" implies that if a POA is old there is a chance the principal has revoked the power or signed a new POA to replace the old one.

This is why POA documents should be kept "fresh" by signing new ones at least every five years.

It is important to understand that when a bank refuses to accept a POA it is not necessarily being "difficult" or unreasonable. The bank can be sued if it allows the wrong person to access an account, or grants access under the wrong circumstances. Similarly, the bank wants to protect its customers' funds.

However, if the bank proves recalcitrant, hiring an attorney to make a phone call or send a sternly worded letter to the bank manager will likely resolve the issue.

Of course, working with an experienced estate planning attorney to create a comprehensive and robust durable financial POA may very well prevent this frustrating scenario in the first place.

In the last six years, nearly 15,000 people have lost a total of more than $72 million on IRS phone scams. While these scams vary in approach, they typically threaten people with immediate arrest unless the victim pays the caller quickly using a wire transfer, gift card, or prepaid debit card.

IRS scams have historically been one of the most common tactics used by phone scammers. However, scammers are using a new tactic this year, one that involves the victim's Social Security information. In fact, according to FTC complaint data and information from background check provider BeenVerified, reports of Social Security scams increased by a factor of 23 in the first six months of 2019.

In April, the FTC revealed that $6.7 million in reported losses were recorded in the previous two months alone, with the scam targeting all age groups. Actual losses were undoubtedly higher since many people do not report that they have been scammed.

Like the IRS scam, victims are often instructed to pay with gift cards, but other forms of payment like bitcoin and putting cash into bitcoin ATMs have also been used. The approach is somewhat similar to the IRS scam as well.

Scammers frequently utilize official-sounding language, badge numbers, and fictitious lawsuits to intimidate victims into paying quickly.

BeenVerified provided the following example:

"This message is from the legal department of the Social Security Administration. My federal badge ID is SSA 456. The purpose of this call is regarding an enforcement action, which has been executed by the U.S. Treasury against your Social Security number."

While only 3.4% of people who report an attempted phone scam actually fall for it, the median amount of damages is $1,500. According to the FTC, this is four times higher than the median individual loss for all frauds.

Given the prevalence and long history of the IRS phone scam, together with public education efforts undertaken by the IRS, more people today understand that the IRS would never call and demand immediate payment for anything. This development accounts, in part, for phone scammers changing their tactics and focusing on the Social Security scam. It is important for people to understand that the Social Security Administration will not use a recorded message to demand immediate payment, threaten a lawsuit, suspend one's Social Security number, and other nefarious, fraudulent claims. If you receive such a call, ignore it. Or better yet, report it.

Many people experience a sense of relief when their estate plan is completed. This is understandable. It's a great feeling to know you have thoughtfully prepared for your future financial, physical and emotional well-being, as well as that of the people you care about most. But does that mean you can just put your plan in a desk drawer and never think about it again? Absolutely not. Keeping your plan up to date is just as important as creating a well-designed plan in the first place. The reason for this can be summed up in a single word: Change.

Your needs will inevitably change as you grow older. So, too, will your health, financial situation, income, and the overall value of your assets. The needs of your loved ones will change as well. After all, people get divorced and remarry; they have children; they buy and sell homes, start a business, change jobs; and sometimes, they suffer unforeseen financial difficulties like bankruptcy, or personal problems like alcoholism. By having your plan reviewed and updated, you are able to take the changes that are part of life into account, and better protect both you and your loved ones.

In addition, the law itself is constantly changing. New laws take effect that make some options for protecting assets less attractive than they were previously. Similarly, new opportunities arise for wealth preservation and growth.

As 2019 comes to a close, you will likely think about all of the changes that have taken place over the course of the year. If you believe any of them might impact your estate plan's effectiveness, we urge you to have your plan reviewed.

On December 20, 2019, the Setting Every Community Up for Retirement Enhancement Act (SECURE Act) was signed into law and became effective January 1, 2020. This law is the most impactful legislation affecting retirement accounts in decades. Although there are positive changes for retirement accounts under the SECURE Act, there is a significant change that affects the beneficiaries of your retirement accounts. The SECURE Act requires most designated beneficiaries to withdraw the entire balance of an inherited retirement account within 10 years of the account owner’s death.

O’Connell Law is hosting a series of 30-minute webinars to bring our clients and friends up to speed regarding this new law. Even if you unable to attend the live webinar, please consider registering so that you will have recorded access to this important information.

1/21/20 at 12pm: The Secure Act: What is It and What’s It’s Implications

1/22/20 at 4pm: The Secure Act: Time to Look at Roth Conversions

1/23/20 at 2:30pm: The Secure Act: Charitable Options

1/27/20 at 4:30pm: The Secure Act: Life Insurance May Help

Here is a link so that you can register for the upcoming webinar(s): https://psb45c27.pages.infusionsoft.net.

Finally, we will be sending out a detailed letter to our clients regarding this new law. If you have any concerns regarding how this new law impacts you, please do not hesitate to contact us directly at 508-202-1818 or [email protected]. We are happy to help.

Wishing you all a happy and peaceful 2020!

As always, thanks for taking the time to read and reflect!

Warmly,