25 Jul How to fight banks on power of attorney

Q. Who should we contact when the bank will not accept the general power of attorney because the document names two siblings listed and the wording states “and” but the bank wants it to say “or.” Our father is in the hospital from a bad stroke he is very confused about everything, and we would like to write checks for his monthly bills and any costs that may arise to care for him.
— Flummoxed

A. The refusal of banks to accept a valid power of attorney has become a huge problem all across the country.

But there’s hope for your situation.

Under New Jersey law, banking institutions must accept a power of attorney unless the principal’s signature is not genuine or the bank employee has received actual notice that the principal is dead or was not competent to execute the power of attorney or that the principal revoked it, said Shirley Whitenack, an estate planning attorney with Schenck, Price, Smith & King in Florham Park.

“The bank is not required to accept a power of attorney that is presented more than 10 years after its date or on which it has not acted for a 10-year period unless the agent is the spouse, parent or a descendant of a parent of the principal,” Whitenack said. “If the agent or principal has provided the bank in writing with the agent’s address, the bank must notify the agent that the power of attorney will not be honored and the reason that it has been rejected.”

Whitenack said banks often reject a valid power of attorney for reasons other than the ones listed above because of concerns about liability. Usually, she said, the bank employee charged with enforcing the bank’s internal policies regarding powers of attorney is not an attorney and may misunderstand the law or is following bank policies which may violate New Jersey law.

“The bank may decide to reject power of attorney documents with joint agents unless the power of attorney specifies that either agent can act independently,” she said. “This is because it does not want to police the need for two signatures when the power of attorney requires agents to act jointly.”

When a valid power of attorney is rejected, you should try speaking to the branch manager, and if that doesn’t work, then ask to speak to someone in the legal department, Whitenack said. If these steps fail and the principal is competent, it may be easiest to simply have the principal sign a new power of attorney that permits the agents to act independently.

But you said your dad is confused.

“If the principal is not competent, the agent may want to contact an attorney to write a letter to the bank explaining the applicable law,” Whitenack said. “Another option to for the agent to threaten to or to actually transfer the assets to a different bank that will accept the power of attorney.”

We wish the best for your dad, and good luck to you.

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This post was first published in July 2016.