John was worried about his partner, Phil. The doctors, nurses and everyone else said the same thing. Yes, he’s in a coma. Yes, it’s serious. Yes, there is still hope of a full recovery, but it could be a week, a month, or even a year until he does fully recover. In the meantime, the bills John ignored over the past few weeks were starting to pile up, and he had to break away from Phil’s side at least long enough to take charge of their financial affairs. John walked into the bank

He almost felt guilty worrying about money at a time like this. The household finances were usually Phil’s thing. Phil worked to provide them with money and made sure it was spent wisely, and John took care of the house and Phil. Now, it was up to John to handle the finances, and thanks to Phil’s savings mindset there would be more than enough money to take care of things. Thankfully, the real estate attorney who handled their closing was also able to set them up with Wills, Healthcare Powers of Attorney and Durable General Powers of Attorney. John sat down with the bank manager and handed him the durable general power of attorney document, his mind running through all of the bills he would have to pay and errands to run before going back to the hospital to be with Phil. “I’m sorry, sir,” the bank manager said. “We can’t accept this power of attorney.”

John just stared back at him. “But…what am I going to do? I don’t have the money to pay these bills…”

Unfortunately, situations like John’s are becoming more and more frequent. Each and every year, more financial institutions tighten their rules on accepting power of attorney documents. Documents that would have been perfectly acceptable five years ago are now being rejected on technicalities and institution rules, all for the protection of the institution. The only solution for John at this point is to go through a lengthy and expensive court process to attempt to be appointed guardian for Phil, and if there are strained relations with Phil’s family, there is a strong possibility a family member will be appointed guardian instead. Then what happens to John?

The problem in this situation is not the law or even the lawyers, but with the financial institutions. Good power of attorney documents are still being accepted with government agencies and most other businesses because the rights, duties, obligations and benefits are governed by law. In dealing with banks and other financial institutions, we are dealing not with legal statutes and regulations but with the contract that was signed when the account was opened. In other words, it doesn’t matter that the power of attorney is valid and legal, it doesn’t matter that the power of attorney states that your partner has the ability to manage financial accounts, and it doesn’t matter that an attorney created it. What matters is the paperwork that is signed when an account is opened. You know, the fine print that no one reads before signing.

This evolution in rejecting power of attorney documents is not happening overnight, and the problem isn’t necessarily widespread. As with most things, these trends are developing in major financial states like California and New York, but institutions in other states are starting to catch on. The two excuses being most used now in rejecting power of attorney documents are that the power of attorney document is “old,” and that the “proper form” wasn’t used.

In rejecting a power of attorney because it is “old,” the banks and other financial institutions are typically saying that a power of attorney that is more than 6 months old was probably “forgotten about” by the person executing it, or that there is a high likelihood that the wishes of the person executing the power of attorney have changed and they just did not bother to change the power of attorney. Again, these are the excuses being used and not necessarily reality.

The second excuse is that the power of attorney is not on their standard form, and because of that the financial institution is not legally obligated to accept it. Unfortunately, many of the contracts signed to open up an account provide language that makes form-specific powers of attorney necessary. Those agreements that do not have that stipulation typically have another clause that allows the financial institution to amend the agreement any time they want, and it may be years after the account is opened that the power of attorney clauses arrive in the mail with a monthly statement in extremely tiny print. Again, who reads that?

While it is still important for partners to have a durable general power of attorney for dealing with certain matters, it has become more critical for partners to have a current and immediate method of controlling accounts in case illness strikes one partner. It is no longer safe to simply rely on powers of attorney to give your partner emergency control of your accounts. One solution, which is not recommended is simply re-titling all of your accounts as joint with a right of survivorship. There are too many potential gift tax problems which we can not get into right now, but for more information please go to www.domesticpartnergifttaxes.com and when asked enter the coupon code ASH908 to receive the report on gift taxes for free.

A better solution for partners is having a joint revocable living trust. When both partners are trustees of this kind of trust, there are no additional steps for a partner to take if one becomes ill. The partner who is well can simply continue to manage the trust and access all of the accounts in the name of the trust. No power of attorney is needed. No transition is necessary. Once the account is titled in the name of the trust and both partners are listed as trustees, both partners have equal control of the account from day one.

While the revocable living trust is becoming more prominently used by committed couples in the LGBT community, it is important to make sure that it is drafted properly by an attorney familiar with domestic partner estate planning issues and that it incorporates a domestic partnership property agreement. In addition, it is not enough to simply have the document in place but it is also critical to make sure all banking and non-retirement investment accounts are titled in the name of the trust. Finally, the revocable living trust must also be accompanied by healthcare power of attorney and durable general power of attorney documents to ensure you and your partner are covered during life, if a partner falls ill, and when a partner passes on.

It is unfortunate that so many banks and other financial institutions are rejecting perfectly legal power of attorney documents because of bank regulations. However, there are solutions to help domestic partners (and everyone else) plan for a possible incapacity now and avoid potential problems in the event of a crisis.

Jeffrey G. Marsocci is a Raleigh-based life and estate planning attorney who frequently lectures and works in Asheville. He is also the author of Estate Planning for Domestic Partners, and focuses on helping domestic partners achieve many of the same rights married couples have. He can be reached through his main Raleigh office at 919-844-7993, and his book providing valuable information on revocable living trusts for LGBT couples can purchased at www.estateplanningfordomesticpartners.com. For more information on domestic partner estate planning issues, please check out the Podcasts at www.rainbowlegaltalk.com.