Families often create a power of attorney (POA) to ensure that someone can act on behalf of an aging loved one. Whether it's to pay bills, manage investments, or arrange long-term care, having this legal authority in place can be critical. However, problems arise when a bank or financial institution refuses to accept the document, even though it appears to be legally valid.
Banks may reject a POA for several reasons. One common issue is that the document is outdated or does not align with the institution’s internal requirements. Some banks insist on their own forms or require additional verification, citing concerns over fraud, liability, or unclear language in the document.
In other cases, staff may be unfamiliar with the legal authority a POA grants or may lack clear policies on how to handle these documents. These delays or denials can stall urgent medical or financial decisions, placing additional stress on families already navigating a crisis.
A legally executed POA—signed by your parent and, where required, notarized or witnessed—should be enforceable. However, because financial institutions operate under risk-avoidance protocols, they sometimes interpret these documents narrowly. This can be frustrating for families trying to fulfill caregiving duties or manage urgent expenses.
In most states, the law protects against unreasonable rejection. Banks may be required to respond within a specific period or accept a document, unless they have a legitimate reason to refuse it. If a bank denies your POA, ask them to provide their reason in writing.
There are several steps families can take when drafting a power of attorney to reduce the likelihood of rejection. First, use a durable POA, which remains valid even if the principal becomes incapacitated. Be sure it includes clear language authorizing all necessary financial powers.
It also helps to name a trustworthy and financially responsible agent. If the document is being used primarily to access bank accounts or handle investments, consider taking it to the institution when it’s signed. Some banks will keep a copy on file, making future transactions smoother.
If the POA is rejected after these precautions, you may need to consult an estate planning attorney. In rare cases, legal action or court intervention may be necessary to compel compliance or appoint a guardian. Request a consultation with our estate planning team today to prevent these challenges from emerging.
Legacy One Law Firm, APLC is an estate planning and probate administration law firm in Los Angeles, California, serving families throughout the State. Schedule a quick and easy consultation with our estate planning attorney, Sedric E. Collins, Esq., or call 323-900-5450.
References: AARP (July 31, 2023) "What Caregivers Can Do When Banks Reject a Power of Attorney?" and Consumer Financial Protection Bureau (August 30, 2024) "My family member signed a power of attorney (POA) but when I took it to the bank/credit union, I was told the POA has to be on the bank/credit union's form. What can I do?"
