A relative has finally completed their Estate Planning documents, including a valid Illinois Durable Power of Attorney. You are named as agent, and when the time comes to exercise your authority, you go to the bank with the document in hand. To your surprise, the bank refuses to recognize the document and permit you to access the account, pay bills, perhaps even providing any information about accounts in Dad’s name.
This scenario shouldn’t happen but all too often does; especially when bigger banks who have drafted their own forms are involved. Sadly, bank personnel are more familiar with their own policies than they are with the law.
If this happens, the first thing is to review the forms with an attorney to insure the documents were duly executed per the laws of the Principal’s state of residence (example: Dad lives in Illinois, so Illinois law applies; even if son resides in Iowa).
Some banks insist that only their bank forms can be used. Power of Attorney forms they honor are those the bank generates internally. While it might be tempting to just go along with this, it is neither advised nor legally necessary.
Remember, the bank officer is not an attorney and may be making request that serve the bank’s needs and not your needs. For example, it is common for banks to suggest you name the Agent on your account as a signatory in advance as a joint account. This makes your Agent a co-owner of your account, not your agent and can be a cause of disputes upon your death. Banks get sold, consolidate, and change policies.
Crucially, it inhibits your Agent’s ability to fully protect your assets and funds; transfer funds to another banking institution, etc. If your Power of Attorney only works with Bank A; you are stuck working with that bank.
More important, it isn’t actually necessary. The Bank will claim it is doing this to protect the client; but they are also seeking to protect themselves. Illinois law states that the bank is protected, since a “good faith reliance on a document purporting to establish an agency will protect the reliant without an affidavit. “ (755 ILCS 45/2-8)
Financial institutions or banks that refuse to honor a Power of Attorney that is properly executed can be at risk for civil liability and financial penalties including damages; if they arbitrarily or unreasonably refuse to cooperate with and comply with the directions of an agent who has been duly appointed. (755 ILCS 45/2-8)
Banks can request an Affidavit or Certification.
Banks do have a duty to protect their clients’ accounts and privacy. Given the potential for misrepresentation, the bank can require an Agent to certify, under oath, that to the best of their knowledge, the principal was of sufficient capacity and soundness of mind to execute the document when it was created; and that the Principal is currently alive (remember, the Power of Attorney powers ends on the day the Principal dies); and has not revoked, altered or terminated the Power of Attorney you are presenting to the Bank; which is still in full force and effect. To make this easier, there is a statutory form provided by the State of Illinois for this purpose.
Some tips to make it easier on your Agent:
If a spouse is named as Agent, the spouse should include in the affidavit that there is no pending action for dissolution of marriage, divorce or legal separation in any court.
If the Durable Power of Attorney has a triggering or springing clause; the affidavit should include information that the triggering event has occurred. A common triggering clause is incapacity of the Principal or a requirement that a physician has found the Principal no longer has capacity to act in their own interests; the affidavit should include this information and a copy of the letter
If an Agent continues to run into issues with a Bank, a letter from an attorney quoting the law is often sufficient. If the bank is still not cooperating with the Principal’s wishes to designate an Agent, there are other options built into the Power of Attorney statutory form, which states that the Agent has the power to “delegate discretionary decision making powers”; allowed the Agent to execute the in-house forms on behalf the of the Principal if the Agent so determines that is in the best interest of the Agent.