You have gone through the effort of creating a power of attorney, choosing a trusted agent, and executing the document properly. Then your agent walks into a bank to handle a financial matter on your behalf, and the bank refuses to honor the POA. Unfortunately, this scenario is more common than you might expect, and it can create serious problems when time-sensitive financial matters need attention.
Why Banks Sometimes Refuse a POA
Financial institutions have legitimate reasons for being cautious about power of attorney documents. POA fraud is a real concern, and banks can be held liable if they honor a fraudulent or revoked POA. However, some banks take their caution too far, creating unnecessary obstacles for agents with perfectly valid documents.
Here are the most common reasons banks refuse to accept a power of attorney.
The POA is too old. Some banks have informal policies of rejecting POAs that are more than a few years old, citing concerns that the document may have been revoked or that the principal's circumstances may have changed. While most states do not impose an expiration date on durable POAs, some banks apply their own freshness standards.
The bank wants its own form. Many financial institutions have their own proprietary power of attorney forms and prefer (or insist) that customers use those forms instead of independently drafted POAs. Banks argue that their forms contain the specific language and provisions they are comfortable with.
The POA lacks specific powers. If the POA uses general language rather than specifically listing the financial powers being granted, a bank may decline to honor it on the grounds that the agent's authority is unclear or insufficient for the requested transaction.
The bank's legal department needs to review it. Large banks often route POA documents to their legal or compliance departments for review before accepting them. This review can take days or even weeks, creating frustrating delays.
Concerns about the principal's capacity. If the bank has reason to believe that the principal lacked capacity when they signed the POA, or if they suspect undue influence, they may refuse to honor the document pending further investigation.
The POA was not notarized. Even in states where notarization is not strictly required, many banks will not accept a POA without a notary seal.
Your Legal Rights When a Bank Refuses
In response to widespread problems with banks refusing valid POAs, many states have enacted laws specifically addressing third-party acceptance of power of attorney documents. These laws generally provide several important protections for agents.
Mandatory acceptance. Many states now require banks and other financial institutions to accept a properly executed POA within a reasonable time period, often 7 to 14 business days. Refusal without a valid legal reason can expose the bank to liability.
Limited grounds for refusal. State laws typically specify the limited reasons a bank may refuse a POA, such as a genuine belief that the POA has been revoked, evidence that the principal lacked capacity, knowledge of the principal's death, or the POA's failure to comply with state law requirements.
Liability for unreasonable refusal. Some states allow the agent to recover attorney's fees and damages from a bank that unreasonably refuses to honor a valid POA. This provides a legal remedy and creates an incentive for banks to comply.
Certification requirements. Some states allow banks to request a written certification from the agent confirming that the POA is still in effect, the principal is still alive, and the agent is acting within the scope of their authority. This provides a reasonable verification step without requiring the bank to refuse the POA outright.
Practical Steps to Prevent Rejection
While you cannot control every bank's internal policies, there are practical steps you can take to minimize the risk of your POA being rejected.
Present the POA Before You Need It
One of the most effective strategies is to have your agent present the POA to your financial institutions before it needs to be used. Visit the bank together with your agent, introduce them, provide a copy of the POA for the bank's files, and ask the bank to note the POA on your account. This allows the bank to review the document at their leisure, ask any questions, and have everything in order before an urgent need arises.
Use the Bank's Own Form
If your bank has its own power of attorney form, consider completing it in addition to your standard POA. Using the bank's form for that specific institution, while maintaining your broader POA for all other purposes, can eliminate resistance at that particular bank.
Ensure Proper Execution
Make sure your POA is notarized, even if your state does not strictly require it. Include all witnesses required by your state's law. Use your state's statutory form if one is available, as banks are generally more comfortable with standardized forms.
Include Specific Financial Powers
Rather than relying on broad, general language, include specific powers that relate to the types of transactions your agent may need to perform. List powers such as accessing accounts, making deposits and withdrawals, transferring funds, opening and closing accounts, managing investments, and accessing safe deposit boxes.
Keep the POA Current
If your POA is several years old, consider re-executing it with a current date. While this is not legally necessary in most states, it removes the "stale document" objection that some banks raise. Some people re-execute their POA every five years as a matter of course.
Carry a Certification
Some states allow agents to provide a written certification affirming that the POA is still valid. Having a prepared certification ready to present can streamline the acceptance process.
What to Do If Your POA Is Rejected
If a bank refuses to accept your power of attorney despite your best efforts, consider these escalation steps.
Ask for the specific reason in writing. Request that the bank put its refusal and the specific reason in writing. This creates a record and forces the bank to articulate a clear basis for its position.
Escalate within the bank. Speak with a branch manager, regional manager, or the bank's legal department directly. The initial refusal may be the result of a front-line employee's unfamiliarity with POA documents rather than a bank-wide policy.
Cite your state's law. If your state has a mandatory acceptance law, bring a copy of the relevant statute and politely reference it. Many bank employees are not aware of these laws, and educating them can resolve the issue.
Contact a banking regulator. If the bank continues to refuse unreasonably, consider filing a complaint with your state's banking regulator or the Consumer Financial Protection Bureau (CFPB).
File a formal complaint. If the matter is urgent and the bank will not budge, file a complaint with your state's banking regulator or the CFPB citing the relevant laws and potential liability. Documenting the bank's refusal in writing strengthens your position.
Plan Ahead for Smooth Banking
Bank resistance to powers of attorney is a known problem, but it is one that can be largely prevented through careful planning. By drafting your POA with specific financial powers, having it properly notarized, presenting it to your banks in advance, and keeping it current, you dramatically increase the chances of a smooth experience when your agent needs to act.
mypoa.ai helps you create a power of attorney with clear, specific financial powers designed to meet the expectations of banks and financial institutions. If you encounter persistent acceptance issues, citing your state's mandatory acceptance laws and filing complaints with banking regulators are effective ways to resolve the situation.