Can a Bank Refuse to Accept Your Power of Attorney?

Well…YES!  If you’ve been reading my blogs, you already know that a properly-drafted Durable Power of Attorney is the most important legal document you can have. And that it’s an essential part of every Incapacity Plan and Estate Plan. It authorizes someone whom you designate to act on your behalf with regard to financial or legal documents, if you’re unable to.

Under the law passed in 2011, the banks must accept a power of attorney that conforms with the specific requirements of the law. However, in some cases, a bank will hesitate to accept a Power of Attorney if it has reason to believe that the agent does not have the proper authority, or that he/she is no longer the agent.

Banks are afraid of legal liability, and many won’t accept Powers of Attorney, for fear of being parties to fraud. Some have rejected documents more than a year old, or those from out of state. This, as you might imagine, puts an incredible burden on adult children or designees.

However, there are methods of making these documents more acceptable to banks. But it takes meticulous planning…planning that can only be done by an Elder Law expert.

So… how can you improve the chances of having your Power of Attorney accepted by the bank?

• Be proactive! Set it up while you’re still healthy, and in full control of your mental faculties.
• Don’t be penny-wise and pound-foolish! Yes, you can find a Power of Attorney standard form on the Internet. But is that what you’re going to trust your children’s future to? The way to save money is to do it right the first time…and not have to re-do it in the future! Don’t use a one-size-fits-all form from the Web! You need a document customized to your specific circumstances, needs, and wishes AND CONFORMING TO THE SPECIFIC REQUIREMENTS OF THE 2011 STATUTE.
• Keep it current! The best way to avoid problems with banks is to review/update your document – every year.
• Make sure it conforms with the 2011 Statute.
• Avoid the use co-agents who have to act jointly. Banks may not honor a joint power of attorney, because they don’t want the responsibility of policing a document requiring two signatures.
• A Revocable Living Trust. If you want to spare your family the horrors of probate, you need a Revocable Living Trust (RLT). A Will by itself will result in probate. An RLT also offers continued management of your assets by your trustee, if you become incapacitated.

When a financial institution refuses to accept a Power of Attorney. I don’t have to tell you what a hardship this can impose on the family. So it’s important to try and find out what your bank’s policies are in this regard, and if they have a history of declining to process Powers of Attorney or other legal documents. If they do – and if you’re not comfortable with their policies – it may be time to consider another bank!

As with all matters pertaining to estate planning, the time to start planning is EARLY…not suddenly when an emergency strikes.

We’re talking about some of the most important decisions you’ll ever make. And the time to make them – and make them wisely – is when you can make them calmly and rationally, not under duress or pressure.