‘My Bank Does Not Like My POA’

The title of this article is a phrase I hear at least once a month. No further explanation is usually necessary.

When the client calls come in, the Powers of Attorney in question are ones that we have prepared and ones that we did not. Banks scrutinize all of the POA forms that are submitted for their review. They are ensuring that an invalidly prepared or executed form is not attached to an account which could lead to fraudulent transfers by parties who do not have proper fiduciary authorization.

I get it. There are shady POA forms out there.   

But picture this scenario: an aging parent suffers a medical emergency and has been hospitalized. The parent is not capable of paying bills nor able to undertake even rudimentary Medicaid planning for long-term care. Luckily, that aging parent had a POA prepared naming their adult child as agent. An experienced elder law attorney drafted it and presided over its execution. The adult child then presents the POA form to the bank where their parent’s accounts are held.   

The goal is for that adult child to have the legal ability to access their parent’s accounts, pay bills, and transfer funds safely to gain Medicaid approval for community-based care for either at home or assisted living. 

Then, the fun begins. The bank contacts the adult child with a rejection notice. According to the bank, the POA does not meet their standards. Then the adult child contacts me.  

I review the POA. Sometimes there is a material defect in the document – a date is wrong; a name does not match; signatures, witnesses, or notarizations are missing.

The push for REAL IDs with respect to drivers’ licenses brought additional documentation, birth certificates, and naturalization forms into the conversation, leading to name adjustments on government identification. This resulted in name mismatches for financial accounts opened under existing names and accepted nicknames that were on old IDs. Now, banks have real reasons to doublecheck POAs because names do not match. 

For many other POAs, the bank rejections are based off faulty assumptions. Since I began working in elder law, the New York Power of Attorney form has changed several times. Older forms lacked witness requirements and allowed unwanted powers to be scratched out instead of the current initialing powers that are wanted. Old form gift transfer authorizations did not have additional provisions and protective language that are included now.

These differences can confuse bank reviewers and trigger rejections, but the New York statute (General Obligations Law § 5-1501B) does not invalidate an older POA, which was valid when executed; and § 5-1504 sets POA acceptance guidelines that banks have to follow. If banks fail to follow these guidelines, they can be sued.

Any form of unreasonable bank rejection of a POA can be dealt with legally, but the delays these rejections cause are extremely damaging, and missed Medicaid deadlines can cost a family thousands of dollars.

To avoid potential problems, the earlier an executed POA is filed with a bank, the greater the likelihood that any issues can be cleared up before the form’s powers need to be exercised.

Do not wait for an emergency. We want your bank to like your Power of Attorney. Give us a chance to help.

Alan D. Feller, Esq., is managing partner of The Feller Group, located at 572 Route 6, Suite 103, Mahopac. He can be reached at alandfeller@thefellergroup.com.