Critter Corner: What if the Bank Refuses to Accept a Power of Attorney?

Dear Bebe,

My friend’s brother had a stroke and is now incapacitated. As his agent under his Power of Attorney, my friend needs to take over his finances. She recently went to his bank and was told that the bank will not accept his Power of Attorney because it was set up 14 years ago and is “too old.” Can a bank really reject a Power of Attorney for this reason? Are there other reasons this can happen? I am curious, because I want to make sure that this doesn’t happen to me.


Juan Aceptit

Dear Juan,

A Power of Attorney (POA) is a document through which a “principal” appoints someone (an “agent”) to act for him when he is unavailable to act on his own behalf. POAs are widely used as incapacity planning tools; however, banks and other financial institutions are sometimes persnickety about accepting them.

Despite the clear authority granted to an agent in a POA, banks sometimes refuse to honor the agent’s authority. Some of the most common reasons include:

  • The POA is “stale:” A bank may say that the authority granted in a POA is “stale” because the agreement was executed some time ago. Legally, this is not a valid reason to refuse to honor the POA. However, because trying to use an old POA often leads to problems, it is wise to update a POA every year, or at least every three years, just to avoid this problem.
  • Not on the proper form: Financial institutions often refuse to honor a POA if it is not on their own POA form. Legally, a third party usually is required to accept any valid POA. However, if the principal is available, it is often easier to execute a new POA on the bank’s form than to argue the issue. Of course, if you are the principal, you should have your estate planning attorney review the form before agreeing to sign it.
  • No proof of incapacity: A third party, such as a bank, may question whether the principal is really incapacitated. In this case, the agent may need a letter from a physician declaring the principal to be incapacitated, even if the power of attorney does not require that the principal be incapacitated.

To be an effective planning tool, a POA has to be accepted by the bank, broker, or other third party to whom it is tendered. If the bank won’t accept the document, the agent should get the drafting attorney involved to write a letter to the bank threatening litigation if the bank won’t accept the power of attorney (hopefully your friend’s brother had his power of attorney prepared by a lawyer, and not from some online form). Usually this works, but if this does not work, then an agent will be forced to either go to court against the bank to try to force the bank to accept the power of attorney, or to go to court to get the incapacitated person declared to be legally incapacitated in order to obtain authority to manage the principal’s financial affairs through a court-ordered conservatorship, thus beginning the process of lifetime probate which the power of attorney was designed to avoid.

If you have not done Incapacity Planning (including a POA) or Estate Planning, or if you have a loved one who is nearing the need for long-term care or already receiving long-term care, please contact the experienced attorneys at the Farr Law Firm and begin your planning today.

In addition, if you have not updated your planning documents in a while, don’t let too much time pass between reviewing and updating your plan. Be sure to ask about The Farr Law Firm’s Lifetime Protection Program, which ensures that your documents are properly reviewed and updated as needed, so that they will have the proper effect under the law.

Please read Mr. Farr’s article on banks accepting POAs for more details.

Hope this helps,


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About Renee Eder

Renee Eder is the Director of Public Relations for the Farr Law Firm, and gives the voice to the Critters of Critter Corner. Renee’s poodle, Penny, is an official comfort dog who she and her children bring to visit with seniors who are in the early stages of dementia at a local senior home once a month.

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