My bank does not like my Power of Attorney

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 Power of Attorney 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 Power of Attorney 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 or able to undertake even rudimentary Medicaid Planning for Long-Term Care. Luckily, that aging parent had a Power of Attorney prepared naming their adult child as Agent under that Power of Attorney. An experienced elder law attorney drafted it and presided over its execution. The adult child then presents the Power of Attorney 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 Home Care or Assisted Living care.

Then the fun begins. The bank contacts the adult child with a rejection notice. According to the bank, the Power of Attorney does not meet its standards. Then the adult child contacts me. I review the Power of Attorney. Sometimes, there is a material defect in the Power of Attorney — a date is wrong, a name does not match, or 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 double-check Powers Of Attorney because names do not match.

For many other Powers of Attorney, the bank rejections are based on 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 of 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 Power of Attorney that was valid when executed, and § 5-1504 sets Power of Attorney 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 Power of Attorney 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 Power of Attorney 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. Contact the professionals at The Feller Group, P.C. today to assist you with your Estate Planning options.

Contact the professionals at The Feller Group, P.C. today to assist you with your Estate Planning options.