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What Caregivers Can Do When Banks Reject a Power of Attorney

Steps to take to ensure the key document is easily used

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A durable power of attorney (DPOA) is one of the most important tools in a caregiver’s toolbox. A DPOA is a legal document that nominates a person (called an “agent”) to help you with your finances if you become sick and can’t handle your own affairs. The majority of caregivers handle some financial coordination for a friend or loved one — like paying bills from their care recipient’s accounts, managing investments or handling insurance claims. And without a power of attorney (POA), it can be a frustrating and almost impossible task.

I was a sudden caregiver for my mom. She did not have a POA prepared. She spent weeks in the hospital and rehab after brain surgery and it was maddening for me to do even the simplest tasks, like paying her utility bill that became overdue while she was hospitalized. Thankfully, she recovered enough to sign a POA when she was of sound mind. If not, I would have had to go through the expensive and time-consuming process of becoming her court-appointed guardian. This would have been extremely difficult, because I couldn’t afford to pay for her expenses and bills out of pocket; it was necessary for me to have access to her funds to keep her bills up to date.

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If your caregiver is going to someday access your finances, they’ll either need a POA or a court order that gives them that right. But sometimes, when a caregiver presents a POA to a financial institution, such as a bank, the employees decline to accept it and turn the caregiver away. Banks are on high alert for elder financial exploitation and scams; if there is a question about the validity of the POA, they may deny its use. The reasons for a bank rejecting a POA vary, but here are some I’ve heard: 

  • The POA doesn’t meet the state’s requirements for language or how it’s signed.
  • The POA is extremely old. 
  • The POA is not durable.
  • The bank wants the person who signed the POA or the agent or both to appear in person at the bank to use the document.
  • The bank wants the account holder to use the bank’s own POA form.
  • The bank wants additional documentation from the agent.

It can be exceedingly frustrating for a bank to disregard a POA, especially if they are wrongfully rejecting it. 

Understand why your power of attorney was denied

First, ask the bank for the reason they’re not accepting the POA in writing and then look up the law in your state. There may be procedures and time frames that a bank must follow when it decides to reject a POA. Learn what the bank is required to do in these circumstances.

Remember that all state laws are different and the document you’re trying to use may not comply with requirements where the bank is located. Some states may require a raised seal from a notary or the agent to sign the POA. This is why it’s so important for everyone to update their documents — especially the POA — if they move states of residence.

If the POA is many years old, it may be too “stale” to effectively use. The laws in the state may have changed since the POA maker originally signed the document. The document may not have the necessary language the bank needs to allow access to accounts. It’s important to update a POA periodically, so long as the POA maker is capable of making a legal document. If the POA maker is incapacitated (meaning they’re physically or mentally unable to make decisions or do things for themself), then they can’t — and shouldn’t — make any new legal documents.

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If a POA is not durable and the maker is now incapacitated, a bank may refuse it. The “durable” part of a POA means that the document can be used even if the maker becomes incapacitated. When a person makes a durable POA, the document is intended to let their agent do the job even if the maker is no longer of sound mind. Without the durable part, the agent won’t be able to use the document after the maker loses capacity due to dementia or other medical issues.

Another challenge: A bank may request that the POA maker and/or the agent appear in person for a request. That may not be possible due to illness, location or mobility issues for one or both of them. It is always wise to have an alternate agent listed in the POA who could step in if needed. If that’s not feasible, the bank needs to be informed why the agent can’t appear and a doctor’s note should be provided to explain the POA maker’s limitations.

When to escalate the issue if a bank refuses your POA

If you’re being asked for additional information by the bank, it may be part of their procedures or a legal requirement. For example, if a power of attorney doesn’t take effect until the maker is incapacitated (called a “springing” power of attorney), the agent may need a doctor to certify that the POA maker is unable to handle his or her own affairs.  It’s another hurdle to jump, but it does protect all involved.

However, even if the bank says they want the account holder to use one of the bank’s power of attorney forms, they still should not reject a POA that is legally effective and has the correct language giving the agent the right to conduct banking transactions for the maker.

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Don’t hesitate to request that the bank escalate the issue with the POA document to its legal or document review departments. You may also reach out to the attorney who prepared the original document. If the bank is seeking the opinion of any in-house legal counsel about the POA, your attorney can assist with communicating with their counsel or bank representatives. Your attorney may also formally record the document in the county and present the certified copy of it to the bank with a letter verifying the validity of the POA.

How to head off power of attorney problems before they happen

Before you run into trouble with a bank rejecting a POA during an intensive caregiving time, the maker and agent may want to visit the bank while everyone is healthy and doing well. You can ask that the bank put the POA on file and double check that it meets the bank’s requirements for approval.  You should also call around to the local branches and confirm the information that they would request to see to access an account using a POA.

If there’s a genuine, valid and still-in-effect POA, there should be no reason for the bank to not accept it. Know that there can be legal consequences if a bank wrongfully refuses a power of attorney; they may be liable for your attorney’s fees and costs if you have to fight them to recognize it.

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