What to Do When the Bank Refuses a POA

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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:

  1. 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.
  2. 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.
  3. 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!

K. Gabriel Heiser is an attorney with over 25 years of experience in elder law and estate planning. He is the author of "How to Protect Your Family's Assets from Devastating Nursing Home Costs: Medicaid Secrets," an annually updated practical guide for the layperson.

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44 Comments

My mother signed new POA forms after my father died in early 2007. My mother has dementia and lives in an assisted living facility although she will need to move to a higher level of care soon. Although she has not been declared incompetent by any court, I doubt whether anyone would consider her capable of understanding any paperwork she would be asked to sign. How do I, as her POA, deal with banks and annuity companies that reject my POA paperwork as "stale"? I have already had one bank refuse, and I had to fill out paperwork for an annuity company stating that I was not aware of any subsequent POA designation.
In my opinion, unless you are an only child, the POA probably does not need to become joint owner of their parent's accounts for the documents gives them the authority to be co-signer. Otherwise, it is a great way to avoid probate.
We had the same problem with an Insurance Co. The P.O.A. was only 4 yrs old. We had to get a notarized statement form, supplied by the Insurance Co., from our attorney validating the P.O.A. After that no one questioned the P.O.A. Yes, our attorney thought it was unnecessary as well, but supplied the document anyway.