One of the most commonly used estate planning documents is a power of attorney. In fact, it is not uncommon to execute more than one power of attorney, or POA, during your lifetime. If someone has named you as an Agent under a power of attorney you now have the legal authority to act on behalf of the Principal (the person who executed the POA) to the extent allowable under the POA agreement. What happens though if the bank won’t honor the power of attorney? What can you do?
A power of attorney is a legal agreement wherein the Principal grants an Agent the legal authority to act on behalf of the principal in legal matters. The extent of the authority granted to the Agent depends on whether the Principal executed a general POA or a limited POA. With a general POA an Agent may act as the Principal in almost all transactions; however, with a limited POA the Agent may only act on behalf of the Principal under the circumstances specifically referred to in the POA document. In essence, with a valid power of attorney you take the place of, or stand in for, the Principal.
Unfortunately, as an Agent you may run into problems with third parties when you present your POA authority. By law, third parties are required to honor a POA as long as they believe it is valid and legal. In reality, however, it is not uncommon for a third party to refuse to accept a POA. Banks are notorious for refusing a POA. Some common reasons given for refusing to honor your authority under a POA include:
The third party requires a POA to be executed on a specific form created by the third party
The third party questions the authenticity of the document
The third party claims the POA is too old
The Agent’s authority is not clearly stated in the POA document
If a bank wants the POA on their own form it is sometimes easier to simply comply, when possible, than to argue about it. If, however, complying is impossible (for example, the Principal is incapacitated and cannot execute a new document), consult with your estate planning attorney because the bank is probably legally required to honor the POA document you have. The bank may take a reasonable amount of time to verify the authenticity of the POA; however, once it has been authenticated it must be honored. Although banks, and other third parties, will claim that a POA is “too old”, the law will likely disagree. Unless the POA itself provides a termination date for the Agent’s authority, a POA does not expire. Contact your estate planning attorney in this case. Likewise, if the bank claims that the POA does not clearly state your authority to act in the matter at hand, you need to speak to your estate planning attorney.
If you have additional questions or concerns about your authority as an Agent under a power of attorney, contact the experienced Illinois estate planning attorneys at Nash Bean Ford & Brown, LLP by calling 309-944-2188 to schedule your appointment today.
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