When a Bank Rejects a Signed Power of Attorney, State Laws May Limit Its Ability to Say No

Picture a bank being handed a power of attorney signed years earlier and insisting it needs its own paperwork instead. A power of attorney allows one person, called the agent, to manage money for another person, the principal. When a bank refuses to accept that document, many state laws now make a simple rejection difficult.

Quick Read

• A Florida jury awarded $64,142 to a father's estate after Bank of America refused a properly signed power of attorney.

• Virginia law does not allow banks to demand their own POA form and generally requires action within seven business days, or they risk a court order and attorney fees.

• The best protection is to deal with the issue while the parent still has mental capacity, ideally by filing the bank's own form during a joint visit.

Why Banks Push Back on Older Documents

Banks are concerned about fraud and about being blamed if an agent misuses an account. A document signed long ago can raise questions about whether it was revoked or whether the principal still wants that person acting on their behalf. Many banks also prefer their own form because their employees know it and their attorneys drafted it.

A Model Law That Gives Banks a Deadline

The Uniform Law Commission created the Uniform Power of Attorney Act as a model for states to adopt. Virginia enacted it as Chapter 16 of Title 64.2 of its code, while Washington replaced its earlier statute with its own version of the act. The language varies from state to state.

Virginia's version illustrates the process. Under Va. Code § 64.2-1618, a bank that receives an acknowledged power of attorney, meaning one signed before a notary, must accept it or ask for more information no later than seven business days after it is presented.

If the bank requests an agent's certification, a translation, or an opinion of counsel, it must still accept the document within five business days after receiving what it asked for. The statute also says a bank may not require a different or additional power of attorney form for authority already granted in the document presented. A bank that violates the rule can be ordered by a court to accept it and may have to pay reasonable attorney fees and costs.

Under § 64.2-1617, the bank may request an agent's certification, which is a sworn statement about facts involving the principal, the agent, or the document. It may also request an opinion of counsel, meaning a lawyer's written view on a legal question, but only if the bank explains the reason for that request in writing or another record.

When a Bank Can Still Refuse

Virginia still allows a bank to refuse in certain situations. It may do so if it knows the document or the agent's authority has ended, or if the agent will not provide the certification or opinion the bank requested. It can also refuse if it believes in good faith that the power of attorney is invalid. A good faith report to adult protective services that the principal may be suffering abuse or exploitation also permits refusal under the same section.

Some states tie these protections to a specific statutory form. In New York, General Obligations Law § 5-1504 bars a bank from refusing, without reasonable cause, a statutory short-form power of attorney properly signed under section 5-1501B or under the law in effect when it was executed. A custom-drafted document may not fall within that protection.

What Agents Can Do After a Refusal

1. Ask for the reason for the refusal in writing.

2. Offer a signed agent's certification, which Virginia law allows the bank to rely on without additional investigation.

3. Ask that the matter be forwarded to the bank's legal department.

4. Cite the state law by section number, such as Va. Code § 64.2-1618.

5. File a complaint with the Consumer Financial Protection Bureau. Federal law includes an agent, trustee, or representative acting for an individual within the definition of a consumer, and the CFPB offers free guides for people named in a power of attorney.

6. Consult an elder law attorney in the parent's state. A court-ordered guardianship remains the last resort and is slower and more expensive.

How to Prevent a Refusal Before It Happens

Prevention works only while the parent still has the mental capacity to sign. Possible steps include signing the bank's own form, replacing an outdated document with a current one, or adding the child as an authorized signer. Making the child a joint owner involves its own risk, because under most state laws each owner has the right to the entire account.

Brokerage accounts offer one additional tool. Under a FINRA rule that took effect in February 2018, firms must ask retail customers to name a trusted contact person. That person must be at least 18 years old, and the firm may contact them about possible exploitation or fraud, or to confirm who has power of attorney.

Some families handle the issue ahead of time. While the parent can still sign, a joint trip to the bank lets the institution place its own form on file alongside the existing one.

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