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Can a bank refuse to recognize a power of attorney?

On Behalf of | Feb 1, 2023 | Estate Planning

Once you decide it is time to create or revise your estate plan, you have several considerations and decisions ahead of you. Initially, you want to think about what tools or documents to include, such as a power of attorney (POA), a will and a trust.

It is wise to consider all the benefits of each document, but you must also ensure they present no potential problems. For example, sometimes banks refuse to recognize or accept a POA. However, you can take steps to minimize this risk.

It must be durable

When creating a POA as an Arizona resident, you may make it durable or non-durable. The word “durable” in this context means that it will continue to function as written even if you become incapacitated. Banks generally do not accept non-durable POAs. You should make your POA durable if you have concerns about possible physical or mental incapacity.

It must be triggered

Some POAs cannot go into effect until the triggering event occurs. For example, a springing POA allows you to specify the conditions that will activate the document. Until that event occurs, the banks you use will not allow access to your accounts.

Make sure the event that activates a springing POA is appropriate to your physical and mental health.

How old is it?

Those who already have a durable POA may feel confident about its validity in case of incapacitation, but how old is it? If it has been a few years since its completion, banks may not recognize your designated agent’s authority. Regularly reviewing and updating your estate plan can help ensure that it can pass muster, even at the bank.