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                The title of the article in the Wall Street Journal a few weeks ago was intended to turn heads.  (See https://www.wsj.com/articles/the-pension-hole-for-u-s-cities-and-states-is-the-size-of-japans-economy-1532972501?mod=hp_lead_pos7) There has been an increasing amount of coverage in the media about the pension crisis in the country, specifically the underfunding of public employee pensions.  According to the WSJ article public employee pension plans are underfunded by an estimated $5 trillion, an amount equal to the size of Japan’s economy.                 We know here in New Jersey we have a growing problem.  According to some estimates our government pension system could run out of money in 12 years.  The legislature and governor have talked about fixing it but there isn’t any easy solution and so far no real measures have been taken.                 What will happen if there isn’t enough money to meet all pension obligations?  Will pensions be cut?  Can they be?  In some states that has already happened or is being tried.  The city of Central Falls, Rhode Island filed for bankruptcy in 2011.  The city’s police and firefighters agreed to pension cuts of 55% because they were fearful that they could lose more benefits if they didn’t.  The city is doing somewhat better fiscally now, but the

                In this week’s post we continue with the topic of power of attorney and specifically how to handle resistance from banks and financial institutions.  Last week I outlined the scenarios in which a bank can refuse to honor a power of attorney.  New Jersey law says that a banking institution does not have to accept the agent’s authority to act if it has actual knowledge of or believes in good faith that the POA is not genuine or has been revoked or that the principal is dead or was under a disability when he/she signed the POA.  But what does “good faith” really mean?                 The statute defines good faith to mean when something is done honestly, regardless of whether it is done negligently.  So let’s look at the common occurrence that I mentioned in Part 1 (my post on 7/30/18), in which the bank insists that the POA be its own form.  Is that acting in good faith?                 I would submit that it clearly it is not acting in good faith because the bank in this case has found nothing wrong with the POA that was presented to it.  It simply would prefer – for its own convenience and

                Last week’s post again addressed the use of powers of attorney and specifically the problem of encountering resistance by a financial institution.  As I explained, many financial institutions prefer that customers sign their own form of power of attorney and do so in front of one of their employees.  This is for their protection but complying with their request isn’t always possible.                 Many of our elderly clients are unable to travel so cannot make the trip.  Sometimes they can no longer even get on the phone.  So how does one counter a bank, for example, that says they need Mom to come to the branch to sign a power of attorney because their legal department questions the validity of the one she signed a few years ago.                 It helps to know a little bit about what the law says about powers of attorney.  Firstly, New Jersey law says that a power of attorney must be in writing.  It must be signed by the principal and acknowledged before a notary public.  There is also a specific section that covers banking transactions.  If the power of attorney gives the agent the power to conduct banking transactions and makes reference to that