Sometimes we draft a Power of Attorney for a client and get a call years later with the announcement that so and so bank will not take the power of attorney because it is more than — years old.
A Power of Attorney allows someone to act for you regarding financial matters. The person executing the Power of Attorney is called the principal. The person who can transaction business under the Power of Attorney is called the attorney in fact.
There is a place on the Minnesota Short Form Power of Attorney to fill in an expiration date. Most clients do not fill in this blank because they do not want the Power of Attorney to expire at a certain time.
Most of Powers of Attorney we do are durable Powers of Attorney, meaning that they continue in effect if the principal becomes incapacitated.
So, the problem is, let’s say we do a Power of Attorney for someone who is 80 years old and it is a durable Power of Attorney. Then five years later, the client becomes incapacitated. Under Minnesota law, the Power of Attorney is still effective.
A Power of Attorney is not like a loaf of bread at the grocery store. The loaf of bread might have a freshness date, or “best if used by.” A Power of Attorney has no such freshness date or date by which it will be characterized as stale. It is effective until the expiration date (if it has one) is reached, the principal revokes the Power of Attorney or the principal dies, whichever occurs first.
Now let’s say seven years later, the attorney, in fact, wants to transact some business for the client and the bank rejects the Power of Attorney. The attorney, in fact, is dumbfounded. The bank says it will not recognize a Power of Attorney that is more than 5 years old. The attorney, in fact, cannot go back and have a new Power of Attorney prepared because the principal is no longer competent.
What can be done? About all you can do is send the bank a copy of Minnesota Statutes Section 523.20. This provides that, a third party shall recognize a Power of Attorney unless it has reason to believe that the Power of Attorney has been revoked or some other reason why the Power of Attorney is no longer effective.
There is no time limit for a Power of Attorney unless it states on its face an expiration date.