You heeded the advice of your friends—or you read an article online or in the newspaper—and purchased a Power of Attorney (POA) form at the local office supply store. Now your loved one is incapacitated and you suddenly find out that the bank is refusing to allow you access to their accounts, despite the fact that you've been granted financial POA.
What went wrong?
There are three main reasons why banks sometimes reject POA:
- It's not durable: First of all, if the POA is not a "durable" POA, then it will only be valid while the "principal" (i.e., the person who signed the document and is appointing someone else—their "agent"—to act on their behalf) is of sound mind. "Durable" in this case means that the POA continues to be effective even after the incapacitation of the principal. Try to use a Durable Power of Attorney, whenever possible, to avoid this problem.
- It hasn't been activated: Second, the POA may be "springing." That means that it will only become effective upon the incapacitation of the principal. Incapacitation must be proven according to the terms of the POA—usually it will indicate that a physician must have examined the principal and determined they are unable to manage their affairs due to mental incapacity, etc. In such a case, the bank will want to see the physician's letter to satisfy itself that you have the power to act as principal.
- It's too old: Even if you've done everything right and the bank should recognize you as the agent and give you access to your parent's bank accounts, it still may refuse because the document is "too old." There is this notion of "staleness," that if a POA is too old, the principal may have revoked the power or signed a new one replacing the old one. For this reason it is good to update your POAs by signing a new one no later than every five years or so.
Handling POA problems with banks
Even with the best attorney-prepared POA form, you may still run into problems when trying to get banks and other financial institutions to recognize the form's validity. Banks are understandably nervous about allowing access to a customer's bank accounts, for fear of a lawsuit if they allow the wrong person access, or the right person access under the wrong circumstances.
If the bank is really acting unreasonably, though, a call from an attorney to a person higher up at the bank, i.e., with more authority regarding these matters, may serve to resolve this troublesome issue and get you needed access to your parent's bank accounts.
Finally, some banks are just more difficult to deal with in this arena and should be avoided, if possible. Local attorneys who practice in this area will have practical knowledge of which banks frequently will give the most trouble to agents under a POA and which are easier to deal with. Finding this out in advance will be your best bet to avoid trouble down the road!