Powerless: Is a Bank or Financial Institution Required to Accept Your Power of Attorney
You heeded the omnipresent warnings to have an estate plan. You have a will, advance medical directive and a power of attorney. You sleep soundly, content that your family will not be ensnared in chaos or dispute as a result of your death or incapacity. You’ve done everything right. Or so you think.
The Corporate Run Around
Sadly, doing everything “right” may not be enough. A recent New York Times article, Finding Out Your Power of Attorney Is Powerless, by Paula Span, addressed a concerning trend of many banks and financial institutions refusing to honor a durable power of attorney. The banks are insisting the account holder sign the bank’s own power of attorney form. The bank’s rationale is they want to protect themselves from liability for fraud. One large bank has been known to require an agent trying to act pursuant to a power of attorney to have letters from two doctors stating that the account holder is incapacitated. Other banks reject documents that are more than 12 months old.
Can they do this?
A bank is required to accept a notarized Power of Attorney unless a statutory exception applies. Virginia Code Section 64.2-1618 requires acceptance of a valid Power of Attorney within seven days of the presentation of the Power of Attorney for acceptance. The same code section also prohibits the bank from requiring an additional or different power of attorney form. There are several exceptions to this requirement. One broad exception allows a bank to reject a Power of Attorney if the bank believes in good faith that the agent does not have the authority specified in the document or the agent has been relieved of his authority. A bank or other entity that fails to comply with this law may be liable for attorney’s fees and costs for any lawsuit to enforce the validity of the Power of Attorney.
What Should you do?
Here are a few tips to increase the likelihood your Power of Attorney will be accepted by banks and other financial institutions.
Make sure you draft your Power of Attorney early, so there is no question of your competency.
- Choose someone you trust and are comfortable with to serve as your agent.
- Avoid having co-agents because requiring two signatures on a document may complicate matters and may cause the bank to reject the double signature requirement.
- Update your document – Make sure your Power of Attorney is current and complies with current law. If your Power of Attorney was drafted prior to 2010 it may need to be updated.
- Have a competent and experienced attorney draft your document. Using an internet form may result in an invalid power of attorney and your document being rejected by a bank.
- Be careful of signing the bank’s Power of Attorney form. They often contain indemnification provisions very favorable to the bank.
If all else fails, hire an attorney to fight the banks for enforcement of your valid power of attorney.
If you need help with estate planning in Chesterfield, Colonial Heights, Dinwiddie, Hopewell, Petersburg, Prince George, or Sussex. Give us a call at (804) 668-5327 or email us at firstname.lastname@example.org to schedule a consultation.
**This material is for Information Purposes ONLY and should not be construed as legal advice and does NOT create a legal relationship with Paul Perdue Attorneys PLLC