Quick Read
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A Florida jury awarded $64,142 to a father's estate after Bank of America (BAC) refused a properly signed power of attorney.
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Virginia law bars banks from demanding their own POA form and requires acceptance within seven business days or they risk court-ordered compliance and attorney fees.
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Prevention only works while the parent retains mental capacity, making a joint trip to the bank to file its own form the most reliable safeguard.
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Consider what happens when a bank is presented with a power of attorney, such as one a father signed in 2015, and says it needs its own form. A power of attorney lets one person, the agent, handle money for another person, the principal. When a bank won't accept a power of attorney, laws in many states now make it hard for the bank to simply turn it down.
Why Banks Push Back on an Older Document
Banks worry about fraud and about being held liable if an agent drains an account. An older document raises questions about whether it was revoked or whether the father still wants that person acting for him. Many banks also prefer their own form because their staff knows it and their lawyers wrote it.
A Model Law That Puts Banks on a Deadline
The Uniform Law Commission drafted the Uniform Power of Attorney Act as a model law for states to adopt. Virginia enacted it as Chapter 16 of Title 64.2 of its code. Washington replaced its older statute with its own version of the act. The wording differs from state to state.
Virginia's version shows how it works. Under Va. Code § 64.2-1618, a bank that receives an acknowledged power of attorney (one signed before a notary) must accept it or request more information no later than seven business days after presentation.
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If the bank asks for an agent's certification, a translation, or an opinion of counsel, it must accept the document within five business days of receipt. The statute also says a bank "may not require an additional or different form of power of attorney for authority granted in the power of attorney presented." A bank that refuses in violation of the law can face a court order mandating acceptance and liability for reasonable attorney fees and costs.
Under § 64.2-1617, the bank can ask for an agent's certification. That's a statement under oath about facts concerning the principal, the agent, or the document. The bank can also ask for an opinion of counsel, which is a lawyer's letter on a legal question, but only if it provides, in writing or another record, the reason for the request.
Exceptions That Still Let a Bank Say No
Virginia lets a bank turn down a request if it knows the document or the agent's authority has ended, or if the agent won't provide the certification or opinion the bank asked for. It can also refuse if it believes in good faith that the power isn't valid. A good faith report to adult protective services that the principal may be facing abuse or exploitation also allows a refusal under the same section.
Some states tie these protections to a specific form. New York's General Obligations Law § 5-1504 bars turning down, without reasonable cause, a statutory short-form power of attorney properly signed under section 5-1501B or under the law in effect when it was signed. A custom-drafted document may fall outside that rule.
In one Florida case, an agent sued Bank of America( NYSE:BAC ) under a state law that penalizes institutions for turning down reasonable requests from agents named in properly signed powers of attorney. A jury awarded $64,142 to his father's estate.
Steps Agents Take When a Branch Refuses
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Agents can ask for the reason for the refusal in writing.
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Agents can offer a signed agent's certification, which Virginia's law lets the bank rely upon, without further investigation.
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Agents can ask that the file be sent to the bank's legal department.
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Agents can cite the state statute by section number, such as Va. Code § 64.2-1618.
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Agents can file a complaint with the Consumer Financial Protection Bureau. Federal law defines a consumer to include an agent, trustee, or representative acting on behalf of an individual. The CFPB also offers free guides for people named in a power of attorney.
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Agents can talk to an elder law attorney in the parent's state. A court-ordered guardianship remains the last resort, and it's slower and costs more.
Preventing a Refusal While a Parent Can Still Sign
Prevention only works while the parent still has the mental capacity to sign. Options include signing the bank's own form, replacing an old document with a current one, and adding the child as an authorized signer. Making the child a joint owner carries its own risk, since under most state laws each of them has the right to the entire account.
Brokerage accounts have one more tool. Under a FINRA rule enacted February 5, 2018, firms must ask retail customers to name a trusted contact person. That person must be age 18 or older, and the firm may contact them about possible exploitation or fraud, or to confirm who holds a power of attorney.
Some families address this in advance. While the parent can still sign, a joint trip to the bank places its own form on file next to the existing document.
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