Can a Bank Decline a Power of Attorney?

By Timothy Mucciante

A power of attorney gives the agent the authority to act on behalf of, and in the name of, the person giving the power of attorney, called the "principal." A general power of attorney gives the agent broad authority over the person's financial matters. Some states require that a bank accept a power of attorney under certain circumstances. In states that do not have such a requirement, a bank may decline to honor a power of attorney at its discretion.

State Laws Mandating Acceptance

Several states such as Virginia and Maryland have passed statutes requiring that banks accept a power of attorney under certain circumstances. In Virginia, a bank must accept a notarized power of attorney unless a statutory exception applies. A bank is not required to accept a power of attorney if it believes in good faith that the agent does not have the authority specified in the document or that the agent has been relieved of his authority.

General Power of Attorney

The bank needs to protect itself and its customer from misunderstandings when it comes to accepting a general power of attorney. Some powers of attorney are very general in scope, giving the agent almost unrestricted ability to handle the principal's financial affairs. A very broad power of attorney may cause the bank to suggest changes that would make it more specific. The bank may want to ensure that the principal, bank and agent all know the scope of the agent's authority over the principal's finances.

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A Bank's Fiduciary Duty to Its Customer

Every agent granted a power of attorney has a fiduciary responsibility to use his best judgment and act prudently when managing the affairs of his principal. Similarly, the bank has a fiduciary duty to its customer, the principal. If the power of attorney presented to the bank appears invalid or poorly written, the bank may reject it. If a power of attorney is "stale" or older than the bank officer feels comfortable accepting, the officer may request that the principal execute an updated power of attorney.

Bank Power of Attorney Forms

To assure consistency for all customers, many banks provide their own power of attorney forms for customers to use. Besides providing uniform consistency among customers, the form and substance of these documents have been reviewed and approved by the bank's attorneys. It is best to contact the bank in advance to determine whether you can use your own power of attorney or you'll be required to use a form furnished by the bank.

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Does a Bank Have to Have a Written Letter of Power of Attorney to Access One's Account?


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