J
ohn’s parents were
in their 90s. They
had banked at Big
Bank for most of
their life. They even
owned stock in Big Bank
since it was listed on the
NYSE. When John’s Dad
died, his mother signed
a Statutory Power of Attorney that John obtained
from the lawyer who handled his divorce. John, his three brothers and his
mother wanted to set up her estate to
avoid probate. His mother had over
$500,000 in her checking account at
Big Bank and another $750,000 in
certificates of deposit (CDs) scattered
at several local banks. He wanted to
move some of the money to another
bank in order to keep the deposit
amount under the FDIC insurance
maximum limit. The banker suggested
that his mother should use a “payable
on death” (POD) beneficiary form to
change her account so that her money
would pass equally to her four sons
without probating her will. The banker
told John that by adding her four sons
to her accounts, her FDIC coverage
at Big Bank would be increased to
$1,250,000. However, the banker insisted that his mother sign a new power of attorney on a standard power of
attorney form supplied by Big Bank.
So John took Big Bank’s power of attorney to his mother. She signed it in a
notary’s presence and he returned it to
Big Bank. John used Big Bank’s power
of attorney to add him and his brothers to his mother’s accounts. Since the
banker had helped him obtain more
FDIC coverage, John decided to simplify his mother’s estate by moving her
other deposits to Big Bank. He took the
add the POD beneficiaries and that John
had relied on the
banker’s advice to
withdraw his mother’s money from the
other banks and deposit it at Big Bank.
Big Bank’s decision
to go back on their
word required John
and his brothers to incur extra expense
and delay to probate his mother’s estate. Big Bank refused to reimburse
John and his brothers for the extra cost
made