Episode 68: Why Good Powers of Attorney Still Fail
Episode 68
Host: Jill Mastroianni
Why Good Powers of Attorney Still Fail
Most people think signing a power of attorney is the hard part but the real challenge is making sure it actually works when someone you love needs to use it.
In this episode, Jill shares a real-life story of a daughter trying to help her mother and running into unexpected roadblocks with a bank, even though the legal documents were properly signed years earlier. You’ll learn why “good” estate planning can still fail in the real world and the five practical steps you can take now to reduce friction later.
This episode is about moving from legal theory to real-life implementation because Death Readiness isn’t just paperwork; it’s making sure your plan works when life gets messy.
What You’ll Learn in This Episode
First: Understanding the Basics
A power of attorney (POA) is the legal document.
The person named to make decisions on someone else’s behalf is the agent.
The person granting authority is the principal.
Capacity matters: once someone loses the ability to understand decisions, the window to create a power of attorney closes.
Immediate vs. springing powers of attorney — and why that distinction matters in a crisis.
Real-World Lesson: Why Good Documents Still Hit Roadblocks
Banks often hesitate to accept older powers of attorney.
Financial institutions prioritize fraud prevention and risk reduction.
Front-line employees may not feel comfortable interpreting legal documents, even valid ones.
A legally sound power of attorney doesn’t always match a bank’s internal expectations.
Jill’s Five Real-World Power of Attorney Tips
#1 Make effectiveness obvious. Clearly state when the power of attorney becomes effective so no one is guessing in a high-stress moment.
#2 Include Third-Party Reliance language. Help banks and financial institutions feel protected when they rely on your document.
#3 Get your power of attorney on file early. Don’t wait for a crisis. Ask each financial institution what they need now.
And be careful:
Agent ≠ Joint Owner
Adding someone as joint owner can change ownership rights and estate outcomes.
#4 Meet banks where they are. Banks are cautious for a reason. Proactive conversations and appointments before a crisis can prevent future delays.
#5 Refresh documents periodically. Even if nothing changes, updated documents often feel more reliable to third parties and can reduce resistance.
Resources & Links
Episode 17, How Powers of Attorney Work, When to Use Them, and When It’s Too Late to Get One
Power of Attorney – Third Party Reliance Section: https://drive.google.com/file/d/1PlbNW7Ty4VUxgvrRgOnVoGQJDnoc6hol/view?usp=drivesdk
Connect with Jill:
Website: DeathReadiness.com
Email: jill@deathreadiness.com
Learn more about Jill’s solutions
Subscribe to the Death Readiness Dispatch!
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Most people think signing a power of attorney is the hard part. It’s not. The hard part is making sure it actually works when someone you love needs to use it. Today, I’m sharing a real-world story and five practical steps you can take now to avoid the most common roadblocks.
Welcome to The Death Readiness Podcast. This is not your dad’s estate planning podcast. I’m Jill Mastroianni — estate planning attorney, death readiness guide, and your translator for wills, trusts, probate, and the conversations most families avoid. If you’ve been wondering things like, ‘Can a trust protect what I leave to my children?’ ‘What happens if I give someone power of attorney over me?’ and ‘How can I help my parents while respecting their independence?’ You’re in the right place.
I often get calls from people when they’re already in a crisis. When something has happened and decisions need to be made fast, suddenly everyone realizes how much they don’t know.
A couple of weekends ago, I was driving a close friend to the airport after a really good weekend — we went to a University of Michigan women’s basketball game, spent time with our new foster puppy, Boots, and I finally tried Zingerman’s, an absolutely amazing sandwich place in Ann Arbor.
But the ride to the airport was different. It was a Monday, a workday, and up until that moment, I’d spent the entire day helping people navigate crises.
We rode quietly for a while, with him petting Boots, who was asleep in his lap, and with me lost in thought about how quickly life changes. Then I asked him the kind of question you only ask someone you know well:
“If your parents had a medical emergency tomorrow, would you know what to do? Would you know their doctors? Their medications? Would you have access to money to help them?”
He said no.
And, that’s the answer I hear most often. We don’t think about these things until we’re already in the middle of the storm.
Today’s topic catches people off guard all the time: things can still go wrong even when you did everything your estate planning attorney told you to do.
Because there’s a real gap between signing legal documents and having those documents actually work when real life shows up.
So today, the focus is on how to position yourself so your financial power of attorney works in the real world, not just on paper.
That’s what Death Readiness is about. Not just signing documents, but making sure they work when life gets messy.
Here’s a quick reminder before we get started — if you’re in Tennessee and you need estate planning documents drafted, or you’re navigating probate after a loss, I am practicing law again and offer estate planning and probate solutions built for real-life situations, not just paperwork. You can reach me at jill@deathreadiness.com. That’s jill@deathreadiness.com.
First, I want to give you a quick foundation on financial powers of attorney so we’re all speaking the same language.
And yes, this might sound like semantics, but it matters: a person is not a “power of attorney.” A person is an agent under a power of attorney.
The person giving the authority is called the principal, and the person receiving the authority is the agent. The term “power of attorney” refers to the legal document itself, the document where the principal grants authority to the agent.
So, for example, if I sign a power of attorney naming my husband Jeremy to make financial decisions for me, I’m the principal, and Jeremy is the agent.
To sign a power of attorney, a person has to have mental capacity, which generally means they can understand information and make decisions based on it.
But once someone can no longer manage their finances or care for themselves, they generally don’t have the legal ability to create a power of attorney anymore. And that’s when families realize that this window has closed.
There are two main types of financial powers of attorney: immediate and springing.
An immediate power of attorney takes effect as soon as it’s signed. Mine with Jeremy is immediate, which means he could act today if needed. The benefit is that if something happened to me, he wouldn’t have to jump through extra hoops to prove that I’m incapacitated before helping. The tradeoff is that, technically, he could use that authority even while I’m fully capable; for example, he could sell our house without me knowing. That’s why choosing the right person matters so much.
The other type is a springing power of attorney. This one only becomes effective upon incapacity. For it to “spring” into effect, there has to be a determination of incapacity, usually defined in the power of attorney document itself. Often, that means two physicians must sign statements confirming that the person can no longer manage their own affairs.
And if you want a deeper primer on how powers of attorney work, when to use them and when it’s too late, I’ll link to Episode 17, my very first Tuesday Triage episode, in the show notes.
But today, I want to move from theory to real life. Because this next story shows exactly what can happen when a perfectly valid power of attorney runs into real-world obstacles.
A friend called me recently because she was having trouble getting a bank to honor a power of attorney her mother had signed back in 2006. I’m going to call my friend Elizabeth, and her mother Katherine.
Katherine signed that power of attorney a few years after her husband died. She wanted to make sure her only child, Elizabeth, would be able to step in if she ever needed help in the future.
And now she does.
Although Katherine was fully competent when she signed the document in 2006, her physical and cognitive health have declined significantly since then. And Elizabeth has more than stepped up. She’s arranged 24-hour care, supports a live-in caregiver, and has done everything possible to help her mother remain comfortable in the familiarity of her own home.
Katherine did everything right. She put the proper documents in place, named the right person to help her, and invested meaningful resources for her future care. She even purchased long-term care insurance.
But here’s what the numbers look like today: Katherine’s care now costs about $27,000 a month. Long-term care insurance covers only about $8,000 of that.
Because Katherine will eventually run out of cash to pay for this care, Elizabeth decided the next logical step was to take out a loan using Katherine’s house as collateral.
And that’s where the plan ran into reality.
The bank told Elizabeth that the power of attorney was too old and didn’t contain the language they require in order for Elizabeth to act as agent, taking out a loan against her mother’s house.
So Elizabeth called me.
I asked her to send me the document. And when I reviewed it, the authority was clear, written right there on page four, explicit permission for Elizabeth to borrow funds on her mother’s behalf and place liens on Katherine’s home if necessary. I wrote a letter explaining that authority so she could provide it to the bank.
But that wasn’t the end of it.
Next, the bank requested a letter from Katherine’s attorney from 2006 confirming that Katherine was competent when she signed the document. The fact that the attorney had notarized the power of attorney wasn’t enough. And there was no way to satisfy that request because Katherine’s estate planning attorney had passed away years earlier.
So the bank moved the goalposts again. They said they would accept a letter from Katherine’s doctor confirming that she was competent back in 2006. But Katherine’s current physicians weren’t her doctors twenty years ago, and no prior physician was willing to write a retroactive opinion about competency.
So here’s the real question: Why does this happen? Why couldn’t Elizabeth simply use the authority that Katherine clearly gave her back in 2006?
Is the world out to get Elizabeth while she’s just trying to help her mom?
No. But I’m sure that’s exactly what it feels like.
The reality is that banks are worried about fraud. Front-line bank employees usually aren’t trained to read or interpret legal documents, and even in-house legal counsel aren’t necessarily estate planning experts. Their job is to reduce risk for the bank.
And Katherine’s power of attorney, even though it’s perfectly valid, doesn’t look like the forms they see every day. It doesn’t match the internal template that makes them feel comfortable.
Banks also want to be absolutely certain that the person showing up with a power of attorney isn’t trying to take advantage of someone vulnerable. They want to know that Elizabeth isn’t stealing money or that Katherine wasn’t pressured into signing the document years ago.
The irony is that Katherine did this planning precisely to make things easier for her daughter.
Now, we’re not going to solve Elizabeth’s situation inside today’s Tuesday Triage. She and I are working on that separately.
But I do want to use her experience to help you avoid running into the same frustrations.
And before we move forward, let me be very clear: Elizabeth and Katherine did exactly what I would have recommended that they do.
What their experience does show me, though, is that even good planning can benefit from a few extra implementation steps. So I’m going to keep doing what I already do, and I’m also making a few upgrades to what I personally recommend to clients.
Here are my top five tips.
Tip number one: If your power of attorney is an immediate power of attorney, say that clearly, right at the top of the document.
Don’t bury it deep in the boilerplate or legal language. In the documents I draft, right after naming the agent, I include a simple line in italics that says: “This power of attorney shall become effective immediately.”
So, why does that matter? It matters because you’re signaling right away that no one needs a doctor’s letter of incapacity before the agent can act. You’re removing that roadblock before it ever shows up.
Tip number two: Include a section called Third-Party Reliance in the power of attorney.
I include this in documents I draft, including my own power of attorney naming my husband Jeremy as my agent, because the goal is simple: we want banks, lenders, government agencies, and anyone else relying on the document to feel protected when they accept it.
If you want to see the exact language from my power of attorney, I’ll link to it in the show notes. But here’s the basic idea. The document says that if the power of attorney is later revoked or changed, the people who relied on it in good faith won’t be held liable for acting on it before they received written notice of that change.
In plain English, I’m telling third parties, “It’s okay to rely on this document. You won’t get in trouble for doing your job.”
And now I’m going to switch gears for a moment and give you a short example of what that sounds like in legal language because this is the kind of wording that helps banks breathe easier:
“If this instrument is revoked or amended for any reason, I, my estate, my heirs, successors, and assigns will hold such party or parties harmless from any loss suffered, or liability incurred, by such party or parties in acting in accordance with this instrument prior to that party’s receipt of written notice of any such revocation or amendment.”
Tip number three: Wherever you have financial accounts, proactively ask what you need to do to get your power of attorney on file.
I’m actually doing this myself right now with my husband. Our financial planner is at RW Baird, and I called her to ask exactly what she needs. She told me to send her my power of attorney and specifically request that my husband Jeremy, who is my agent under that document, be added as an authorized person on the account.
When I send that email, I’ll also ask her to reply confirming that she received the instructions and that everything has been implemented. I’ll save a copy of the email I sent along with her reply with our estate planning documents.
Why? Because if Jeremy ever has to step in and act for me, and he gets pushback, he’ll be able to pull out clear written proof that I already made this request.
Now, this next part is where people make mistakes, and it really matters.
Sometimes a financial adviser, or more commonly a bank employee, will accidentally add the agent under a power of attorney as a joint owner on the account instead of adding them as an agent. And unless your attorney has specifically advised you otherwise, you almost never want that.
Here’s why.
First, a joint owner can do whatever they want with the money. Legally, it’s theirs too. They could drain the account if they wanted to.
An agent under a power of attorney is different. An agent has a fiduciary duty, which means they’re legally required to act in the best interests of the account owner. If they don’t, they can be sued for breaching that duty, this very heightened level of responsibility.
Second, most joint accounts include survivorship rights. That means when one owner dies, the surviving owner automatically gets everything.
Let me give you an example.
Let’s say I have a one-million-dollar investment account that I intentionally keep in my name alone because I want it to pass according to the instructions in my Will. And let’s say I’ve included specific charitable gifts in my Will that are meant to be funded by that account.
I ask my financial adviser to add my husband Jeremy as agent under my power of attorney. But instead, she makes him a co-owner and tells me everything is set.
When I die, that one-million-dollar account bypasses my Will completely and goes straight to Jeremy. Those charities are out of luck.
Tip number four: Banks are often very cautious about accepting powers of attorney, so meet them where they are.
Because there are reasons for that. Bank employees usually have limited legal training when it comes to powers of attorney. The risk of liability is high. And most importantly, they don’t have context.
Imagine I walk into a bank with a power of attorney signed by my husband naming me as his agent, and I ask for full access to his accounts. Even if everything I’m doing is completely legal and done with good intentions, the person behind the counter doesn’t know me. They don’t know our situation. They don’t know whether my husband and I are happily married, going through a divorce, or whether this document has been revoked or replaced.
Their job is to be cautious.
Maybe they try to call my husband for confirmation, but what if we’re at the point where he no longer has capacity? What if he’s been in an accident and is now in a coma? That’s exactly when the power of attorney is supposed to help, and yet that’s when things can stall.
So how do we reduce the chances of this happening?
One simple strategy is to go to the bank before there’s a crisis.
My husband and I could schedule an appointment together, bring our powers of attorney, and say: “We’d like to be added to each other’s accounts as agents under these documents, not as joint owners.”
And then ask a very practical question: “What’s the easiest way for us to make this work? Do you want to use the powers of attorney we already signed, or does your bank have a form you prefer?”
If the bank has its own form, take it home. Show it to your attorney and make sure it works alongside your overall estate plan before you sign anything.
And once everything is set up, double-check that you’ve been added as agents, not co-owners. Remember, that’s an important distinction.
Okay, I have one more tip coming. But before we move on, let’s pause for a quick recap because this is a lot of information, and I want to make sure we stay grounded in the big picture.
Tip number one was about making the document itself easy to understand at a glance, clearly stating when the power of attorney becomes effective so no one is left guessing in a moment of stress.
Tip number two was about giving third parties, banks, lenders, and financial institutions, permission to trust what they’re looking at. That third-party reliance language, which I’ve linked to in the show notes, helps them feel more comfortable saying yes instead of defaulting to no.
Tip number three focused on the behind-the-scenes work most people don’t think about: getting your power of attorney on file ahead of time and making sure your agent is added the right way, as an agent, not as a joint owner.
And tip number four was about meeting the real world where it is, understanding that banks are cautious and that doing some of this work before a crisis, and potentially using the bank’s forms, can save your family a lot of frustration later.
So if you’re noticing a theme here, it’s this: the goal isn’t just signing good documents. It’s reducing friction for the people who may one day need to use them.
Now, we’re at today’s final tip, tip number five: Refresh your powers of attorney periodically, even if you’re not changing the people you’ve named as agents.
My husband and I last signed our estate planning documents in September 2021, and we plan to refresh them before September 2026. Nothing major is changing. We still want the same people in the same roles. But updating the documents helps keep them current and makes them feel more familiar to banks and financial institutions.
If you do refresh your documents and you’ve named the same agents as in prior documents, keep the prior signed versions. Older copies can actually help show a consistent pattern of intent over time.
And here’s something people don’t always realize: if you’re simply updating dates and not making substantive changes, your attorney might not even charge you or might not need much involvement at all.
Now, if everything I’ve talked about today sounds like a lot of work, it kind of is. I’m not going to pretend otherwise.
But like most things in estate planning, it’s far more work to try to fix problems when you’re already in a crisis.
Life is hard. Incapacity is hard. Loss is hard. And I know that.
But I also know this: if you’re listening to this podcast, you’re probably someone who doesn’t shy away from hard things.
And at the same time, I know we all have limits on our bandwidth. I don’t want anyone to walk away thinking they shouldn’t sign a power of attorney unless they can do every single implementation step perfectly.
Done is better than perfect.
If you do nothing else, sign the powers of attorney.
And if you want to make them as strong and as practical as possible in the real world, take the extra steps we talked about today.
Because here’s what I want you to remember:
A power of attorney isn’t just a document you sign and file away. It’s a tool someone you love may one day have to pick up and use while they’re scared, stressed, and trying to help you.
Death Readiness isn’t about perfect paperwork. It’s about reducing friction for the people who will step in when life gets messy.
So start where you are. Do what you can. And know that every small step you take today makes things easier for someone you love tomorrow.
And, if you’re in Tennessee and you need estate planning documents drafted, or you’re handling an estate after someone has died and want steady legal guidance along the way, let me know. I’m happy to be practicing law again and am offering estate planning and probate solutions designed for real-life situations, not just paperwork. You can reach me at jill@deathreadiness.com That’s jill@deathreadiness.com
Thanks for listening today.
This is Death Readiness, real, messy and yours to own. I’m Jill Mastroianni and I’m here to help you sort through it, especially when you don’t know where to start.
Hi, I'm April, Jill's daughter. Thanks for listening to The Death Readiness Podcast. While my mom is an attorney, she’s not your attorney. The Death Readiness Podcast is for educational and entertainment purposes only. It does not provide legal advice. For legal guidance tailored to your unique situation, consult with a licensed attorney in your state. To learn more about the services my mom offers, visit DeathReadiness.com.
