Power of Attorney and Banks: When Financial Institutions Ignore Your POA

Powers of attorney are valuable tools to protect you and your loved ones. I’ve written extensively on their importance and why you should draft these legal documents sooner rather than later. Essentially, if you wait until you need one, it’s probably too late. This rule is especially true in cases of Alzheimer’s or dementia, when mental incapacity makes such decisions impossible.

When Banks Balk

But what happens if you’re a son or daughter acting as the agent on behalf of a parent and the bank won’t recognize your power of attorney?

Say you and your father secured papers a few back, going through an attorney rather than downloading the forms from the internet. In other words, all your i’s are dotted and t’s are crossed. Now your dad has dementia, and you are responsible for his financial affairs.

But the bank is stonewalling you. It insists that your father sign the bank’s forms, but of course, given your father’s incapacity, that’s impossible. You’re frustrated. You’re supposed to take care of your dad’s affairs, and you can’t even pay his water bill.

Unfortunately, scenarios like this happen. From the bank’s perspective (and the perspective of other financial institutions, like retirement plans and brokerages), they’re not obstructing you; they’re protecting your dad. Financial abuse of the elderly is depressingly common, and most of it is inflicted by family members, caregivers, and other people near and dear to the senior citizen.

Despite the bank’s role as watchdog of your father’s money, you also have a role to fulfill. And that’s to take care of your dad’s finances as spelled out in the power of attorney. So what do you do? Here are a few ideas that may be able to prevent or end a standoff.

4 Tips to Stop a Power Struggle

  1. Do the advance work. This is a preventative step. When your dad initially signs the papers granting you power of attorney, he should also contact every financial institution at which he has an account. Will they respect the POA, or do they have their own form that needs to be filled out? This kind of legwork is onerous, but it can pay off in peace of mind.
  2. Move up the chain of command. If a bank employee tells you that they won’t honor a power of attorney, then ask to speak to a branch manager. Keep going up the chain of command until you reach someone who will recognize your agency.
  3. Retain a lawyer. This may sound costly, but it could also lead to a swift resolution. You may not need to sue. Sometimes the lawyer simply needs to make contact, and the bank will fall in line.
  4. Go to court to become a conservatee. This can be a lengthy process in which a judge appoints you as the legal guardian. Some conservatees are responsible not only for a person’s financial affairs but also their medical care, living arrangements, and other daily activities.

Though dealing with a recalcitrant bank may be aggravating, remembering the end goal can help. You’re there to manage the affairs of a loved one who can no longer do it themselves. That alone can give you the diligence you need to persevere until you are successful.