General Durable Powers of Can Attorney Backfire: Lessons from Financial Institution Resistance and the Advantages of Trust-Based Planning

A recent investigative report out of Utah illustrates a growing challenge for families across the country, including in Ohio and Missouri: valid General Durable Powers of Attorney (GDPOAs) are frequently rejected, refused, or delayed by banks, brokerage firms, and insurance companies. When financial institutions refuse to honor these documents, families can face prolonged financial paralysis, increased costs, and, too often, the very court intervention (guardianship or conservatorship) that proactive estate planning was meant to avoid.

The Utah Case Highlights a National Problem

In the widely reported case, Pam Davis attempted to manage her brother Stan’s finances after he fell victim to a devastating scam. Despite holding a valid Power of Attorney (along with conservatorship and guardianship documents), a major credit card issuer repeatedly refused to recognize her authority. Only after media intervention was the matter finally resolved. This is not an isolated incident. Families in Ohio and Missouri regularly report similar frustrations with banks, brokers, insurance companies, and other institutions when trying to use GDPOAs during incapacity or after a loved one’s death.  Moreover, the problem is not new; Diane G. Armstrong, elder consultant and author, testified before Congress in 2003 that even judges "disregard durable powers"  and "ignore our lists of preselected surrogate decisionmakers." (Guardianship Over the Elderly: Security Provided or Freedoms Denied? at p.74).

Ohio and Missouri Law Supports POAs — But Institutions Often Don’t

Both states have strong statutes intended to make GDPOAs effective:

• Ohio generally requires third parties to honor properly executed GDPOAs and provides remedies for unreasonable refusal (Ohio Revised Code Chapter 1337).
• Missouri similarly mandates recognition of valid GDPOAs, emphasizing the grantor’s intent and minimizing unnecessary court involvement (Mo Durable Power of Attorney Act).

Despite these legal "protections," financial institutions often refuse these documents, demand new account openings or additional documentation, or simply stonewall appointed agents. The result is often delayed access to funds, interrupted direct deposits and bill payments, increased stress, and sometimes the need to pursue formal guardianship, a process that removes autonomy, invites potential abuse, incurs high legal fees, and brings the probate court into family matters.

Moreover, only Missouri has a statutory provision interpreted as imposing liability on institutions that wrongfully reject valid GDPOAs.  Ohio adopted most of the Uniform Power of Attorney Act, but expressly chose not to adopt the provision that imposes statutory liability or attorney-fee recovery on third parties who unreasonably refuse a valid POA. As a result, if a bank or brokerage refuses a GDPOA in Ohio, the agent’s primary recourse is usually to file a court action to compel acceptance, without any automatic right to recover attorney fees or damages for the refusal itself.

The Core Problem with Heavy Reliance on GDPOAs

General Durable Powers of Attorney, while essential tools, have inherent limitations in today’s financial environment:

• Rejection, Refusal, and Delay: GDPOAs are frequently rejected or delayed by institutions, even when documents are properly drafted and presented.

• Lack of Seamless Continuity: GDPOAs can expire, be challenged, or become ineffective in certain situations (e.g., after death).

• Vulnerability During Crisis: When a loved one is incapacitated or has passed, families need immediate, reliable access to assets. Institutional resistance can force rushed guardianship petitions, exactly the outcome thoughtful planning seeks to prevent.

• Limited Asset Protection:  A GDPOA does not provide the same level of lifetime asset management flexibility or direction, probate avoidance, creditor or other risk protection, or long-term planning, provided by a properly funded revocable living trust.

Relying too heavily on a GDPOA alone leaves individuals and their estates exposed precisely when they are most vulnerable.

The Stronger Alternative: Trust-Centered Estate Planning

A well-drafted revocable living trust addresses many of these shortcomings and offers superior protection and efficiency:

• Acceptance: Assets titled in the trust are managed by the successor trustee without the need for institutional approval of a GDPOA. Financial accounts, real estate, and investments can continue operating seamlessly.

• Resilience:  While GDPOs get "weaker" over time and lack need or use, trusts build resilience and become "stronger" over time. 

• Asset Protection:  A properly drafted trust can actually protect assets from guardianship control, protecting your preferred decision-makers, and discouraging guardianship by reducing guardian compensation (guardian compensation is often based on the total value of assets managed in the guardianship estate).

• Privacy: Probate avoidance (during life and at death) is built-in with trust planning, minimizing court involvement and public disclosure.

• Reduced Guardianship Risk: With assets in trust and a comprehensive plan, families are far less likely to need court-appointed guardians.  

• Discouragement: Most trust-based plans discourage court involvement and incentivize decision-makers and beneficiaries to respect your advance directives, including those regarding guardianship. 

• Greater Control and Flexibility: The grantor retains full control during life, while the trust provides clear instructions for incapacity and death.

• Acceptance by Institutions and Third-Parties:  Many banks and brokers are more comfortable working with trust-titled and trustee-managed accounts.

Combining a revocable living trust with a properly drafted GDPOA that supports the trust creates a robust, multi-layered plan that minimizes reliance on any single document.

Practical RecommendationsIf you already have a trust, the following are steps you can take right now to support your plan:

• Prioritize trust funding. Work with an elder law attorney to retitle assets into a revocable living trust during your lifetime, and ensure that all qualified accounts (IRAs, TSAs, Roths, SEPs, and retirement plan assets) become property of the trust at the time of your death unless they are directed to a surviving spouse.

• GDPOA Deployment: Use a GDPOA as a safety net, not the primary tool protecting you or your estate. Ensure it is broad, up to date, and accompanied by clear instructions for agents.  Also, if it is your desire,  make sure that it confers authority to transfer assets for the purposes of government benefits planning (Medicaid), and to settle an irrevocable trust (provided beneficiaries are the same) as well as transfer assets to the trust.

• Proactively Communicate with Institutions: Notify banks, brokers, and insurance companies of your trust and GDPOA while you are still healthy. Request written confirmation of receipt and acceptance.  

• Maintain Organized Records: Keep a Certificate of Trust, full trust agreement (in a secure location), and updated GDPOA readily available.  If necessary, consider LegalVault® or Docubank.  For more information, see our articles, "The Trouble With Advance Directives," and "Most Procrastinating on Planning; Those That Plan Don't Protect Their Plans."  You can read all of the articles that discuss or refer to LegalVault® here.   

• Review and Update Regularly: Life changes (marriage, divorce, births, deaths, disabilities, moves, name changes) may require adjustments to the plan.  Consult with your drafting attorney (minimum frequency every 3-5 years) for changes in the law.  Subscribe to this blog.  

The Bottom Line: Plan Beyond the GDPOA

General Durable Powers of Attorney remain important, but they should not be the cornerstone of your estate plan. Over-reliance on POAs exposes you and your loved ones to institutional resistance, delays, and the very guardianship risks you hope to avoid.  A trust-centered approach, with properly titled assets, clear succession, and supporting documents,  provides far greater security, efficiency, and peace of mind. This strategy supports true aging in place by preserving control and minimizing external interference during times of vulnerability.

If you have experienced difficulties with financial institutions honoring a Power of Attorney, or if you want to strengthen your plan with trust-based strategies, contact an experienced elder law attorney. Proactive planning today can prevent unnecessary battles tomorrow.

For more on guardianship reform, visit the National Association to Stop Guardian Abuse (NASGA).What steps have you taken to make your estate plan more resilient? Share your thoughts in the comments. Together, we can encourage better planning practices that truly protect independence and family control.