Time and time again we see cases of inadequate powers of attorney which fail to provide sufficient authority to act. These documents usually obtained on-line through legal providers or Trust mills provide generic, basic provisions that can fall short of a client's needs. The recent case of Metlife Insurance Company v. Sumner is an example. In that case, the wife attempted to change an old beneficiary designation of husband's life insurance from the husband's adult children from a prior marriage to a Trust for the benefit of their minor child. She utilized the power of attorney which provided a general authorization clause giving the wife powers in which the principal (owner/husband, who is now incapacitated) possessed over the policy. The Court held that the general powers clause was insufficient to give the wife specific power to change the beneficiary designation without express power to do so in the document.
Many clients are confused regarding the use of Durable Powers of Attorney in their Estate Plan. In California we have two separate documents, the Healthcare Power of Attorney, known as the Advanced Healthcare Directive (AHCD). The Financial Power of Attorney is called the Uniform Durable Power of Attorney (UDPA).
This subject led me to write a book in the late 90s called Avoiding Tax Traps In Your IRA which was endorsed by Kiplinger's Retirement Reports. In my research for the book, I discovered a minefield of tax traps which caused individuals to lose substantial money to taxes and penalties.