From time to time we come across a situation when a bank refuses to accept a power of attorney. It might be a question of formatting or witnessing or the bank might want to have the individual use the bank or financial institution’s standard form. 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. There are detailed rules in Pennsylvania and other states regarding notices and acknowledgements and other provisions concerning what language needs to be used to effectuate certain purposes, gifting limitations being only one such example. If the document can be resigned correctly and the person who gave the power of attorney is still available, these issues might not be as much of a problem but if the person is now unable to sign or understand the document, as when he or she is suffering from dementia, this may be a major issue.
Under Act 95, a Power of Attorney law passed in 2014, substantial changes were made to Pennsylvania’s law that affected the wording, and witnessing and other requirements and protections for the party granting the Power of Attorney. A major consideration in making the change involved concerns from the banking industry centering on a 2010 case, Vine v. Commonwealth of Pa State Employees’ Retirement Board, 9 A.3d 1150 (Pa. 2010).
In Vine a Pennsylvania State employee, while she was incapacitated following a motor vehicle accident and a stroke was given a Power of Attorney to sign by her then husband. He changed her retirement options and then later filed for divorce. The issue was whether Mrs. Vine, after she recovered, could, by presenting evidence that the Power of Attorney may have been void at the time of her signing because of her condition at that time, invalidate her estranged husband’s option and file for benefits.
The Pennsylvania Supreme Court found that a third party could not rely on a void Power of Attorney submitted by an agent even where the institution did not know that it was void at the time of acceptance. Banks, in reviewing Vine saw a potential for damages.
This changed. The “Vine fix” law, Act 95, describes what a bank, financial institution or other party who is presented with a power of attorney can and cannot do. It provided immunity to anyone who accepts a power of attorney in good faith without actual knowledge that it is invalid. It includes the ability to request an agent’s certification or affidavit and/or an opinion of counsel whether the agent is acting within the scope of his or her authority. On the other hand there is potetial civil liability for refusal to accept a power of attorney that meets all the requirements.
In some circumstances, rather than argue with a bank regarding the validity of a power of attorney it may make sense to have on hand both your own general financial Power of Attorney prepared by your attorney and that bank or financial institution’s own standard form. This is not because the law requires it but rather because the representative to whom you are speaking is accustomed to using their own form that has been cycled through their legal department. On the other hand sometimes it is worth it to fight the bank or financial institution’s decisions especially when you have a validly authorized power of attorney and the person who gave it to you is now incapacitated.
Some banks and financial institutions may, for instance, refuse a power of attorney that requires more than one agent to act together or that otherwise does not fit their standards. Should a refusal to accept the document be fought? As usual the answer is “it depends.”
If you cannot go back and make changes where there is an emergency or the person who signed the power of attorney cannot act, then it can make sense to fight the decision. In the meantime, if you are not sure whether your power would be accepted by your bank, this may be time to check and again review the language and formatting with your estate planning or elder law attorney to make sure it fits current standards.
Esquire, Colliton Law Associates, P.C. Janet Colliton has practiced law for over 38 years, 37 of them in Chester County, Pennsylvania, a suburb of Philadelphia. Her practice, Colliton Law Associates, PC, is limited to elder law, Medicaid, including advice, applications and appeals, and other benefits planning including Veterans benefits, life care and special needs planning, guardianships, retirement, and estate planning and administration.