Powerless Attorney

When Priscilla Jackman spotted a great rate on a certificate of deposit at PNC Bank, she thought the CD would be ideal for her 88-year-old mother, Irene. She drove to the PNC branch near her home in Pittsburgh, taking with her the power of attorney her mother had granted several years earlier.

Jackman was surprised and annoyed when the bank refused to accept the document and told her that her mother would have to sign for the account in person. A review of the power of attorney by the bank's legal department failed to resolve the problem. "The power of attorney specifically says that I can act on her behalf in banking matters," says Jackman. "What gives?"

Jackman's experience, it turns out, is not uncommon. Increasingly, banks and other financial institutions, including PNC, require you to fill out their own powers of attorney. Or, like Vanguard, they may require your lawyer to recertify that your document is still in effect before you can open an account. "It's for the protection of the person who has given the power of attorney," says Vanguard's Ellen Rinaldi.

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T. Rowe Price will accept a power of attorney, but only an original, unless it has been recently drawn up or recertified. "These things are so powerful," says Christine Fahlund, of T. Rowe Price. "You can empty someone's accounts." Laura Horton, the lawyer who drafted Jackman's document, sums up the situation: "Everybody is running scared because they're afraid they're going to be sued."

Contact each company. It's not that Jackman's document was invalid. "A thorough power of attorney should be honored by any brokerage firm or bank," says Suzanne Snedegar, a lawyer in Bethesda, Md. "But every company wants you to use its own form. When I run into that problem, I speak to the bank's legal department and get it resolved." The catch, of course, is that your lawyer's time can cost you money.

A better solution: When a family member grants you power of attorney, ask the financial institutions with which you plan to do business to send you their own forms to be filled out at the same time. "It's best to have all of your investments in one or two banks or brokerage firms anyway," says Martin Shenkman, an estate-planning lawyer in Teaneck, N.J. Otherwise, assets are more apt to be misplaced or even pilfered. The problem, as in Jackman's case, is that this doesn't always allow you to take advantage of the best deals on financial products as soon as they come up. Lest you waste a trip, contact the financial institution ahead of time to ask about its policy.

Steve has been writing for Kiplinger's for more than 25 years. As an associate editor and then senior associate editor, he covered mutual funds for Kiplinger's Personal Finance magazine from 1994-2006. He also authored a book, But Which Mutual Funds? In 2006 he joined with Jerry Tweddell, one of his best sources on investing, to form Tweddell Goldberg Investment Management to manage money for individual investors. Steve continues to write a regular column for Kiplinger.com and enjoys hearing investing questions from readers. You can contact Steve at 301.650.6567 or sgoldberg@kiplinger.com.