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What Happens if Power of Attorney Documents Are Rejected?
Challenges with Power of Attorney Documents
“The possibility that a power of attorney might be rejected may be one reason not to simply pull a form off the internet and hope it will be accepted.”
Reasons for Rejection by Financial Institutions
It is frustrating when a bank or other financial institution declines a Power of Attorney. It might be that the form is too old, the bank wants their own form to be used, or there seems to be a question about the validity of the form. A recent article titled “What to know if your bank refuses your power of attorney” from The Mercury discusses the best way to prevent this situation, and if it occurs, how to fix it.
The Importance of State-Specific Language and Requirements
The most important thing to know is just downloading a form from the internet and hoping it works is always a bad idea. There are detailed rules and requirements about notices and acknowledgments and other requirements. Specific language is required. It is different from state to state.
The Risk of Relying on Internet-Downloaded Forms
It’s not a big deal if the person who is giving the power of attorney is alive, well and mentally competent to get another POA created, but if they are physically or legally unable to sign a document, this becomes a problem.
Legal Implications and Court Cases
The Pennsylvania Supreme Court Decision
There have been many laws and court cases that defined the specific language that must be used, how the document must be witnessed before it can be executed, etc. In one case in Pennsylvania, a state employee was given a power of attorney to sign by her husband. She was incapacitated at the time after a car accident and a stroke. He used the POA to change her retirement options and then filed for divorce.
Ensuring Validity of Power of Attorney Documents
At issue was whether she could present evidence that the POA was void when she signed it, invalidating her estranged husband’s option and his filing for her benefits.
The Role of Third Parties in POA Verification
The Pennsylvania Supreme Court found that a third party (the bank) could not rely on a void power of attorney submitted by an agent, even when the institution did not know that it was void at the time it was accepted.
Ensuring Your Power of Attorney is Accepted
Combining Personal and Financial Institution POA Forms
For banks, this was a clear sign that any POAs had to be vetted very carefully to avoid liability. There was a subsequent fix to the law that provided immunity to a bank or anyone who accepts a POA in good faith and without actual knowledge that it may be invalid.
Addressing Doubts and Validity Concerns
However, it includes the ability for a bank or other institution or person to request an agent’s certification or get an affidavit to ensure that the agent is acting with proper authority.
It may be better to have both a POA from a person and one that uses the bank or financial institution’s own form. It’s not required by law, but the person from the bank may be far more comfortable accepting both forms, because they know one has been through their legal department and won’t create a problem for the bank or for them as an employee.
When to Fight a Rejected Power of Attorney
There are occasions when it is necessary to fight the bank or financial institution’s decision. This is especially the case, if the person is incapacitated and your POA is valid.
Seeking Professional Guidance
Working with an Estate Planning or Elder Law Attorney
If there is any doubt about whether the POA would be accepted by the bank, now is the time to check and review the language and formatting with your estate planning or elder law attorney to be sure that the form is valid and will be acceptable.
Reference: The Mercury (July 7, 2020) “What to know if your bank refuses your power of attorney”
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