"We Have a Power of Attorney." Why Banks Still Say No—and What Families Can Do About It

One of the most common misconceptions in estate planning is that once a power of attorney is signed, the hard work is done.

In reality, many families discover that the true test of a power of attorney occurs years later, during a medical crisis, when an agent attempts to use the document for the first time. Unfortunately, that is also when many banks, brokerage firms, and financial institutions begin asking questions.

"We have a power of attorney" is often followed by another statement:

"The bank won't accept it."

As frustrating as this situation can be, it is also surprisingly common.

Why Financial Institutions Hesitate

Financial institutions face significant liability concerns when allowing someone to access another person's accounts.

From the institution's perspective, a power of attorney may have been revoked, superseded, altered, or improperly executed. The principal may have died. A newer document may exist. The agent may be attempting to exercise powers that were never granted.

As a result, institutions frequently subject powers of attorney to internal review before permitting transactions.

Families are often shocked to learn that a document signed years earlier may not be immediately accepted when it is needed most.

The Problem With "Emergency Planning"

Many people view powers of attorney as emergency documents that remain safely stored in a drawer until disaster strikes.

The difficulty with this approach is that neither the client nor the family knows whether a financial institution will have concerns until the document is actually presented.

By that point, mortgage payments, tax obligations, insurance premiums, and healthcare expenses may already require immediate attention.

A delay of even a few weeks can create significant stress during an already difficult period.

A Better Approach: Pre-Approval

One of the most practical yet underutilized planning strategies is having clients contact their financial institutions while they are healthy and competent.

Many banks and brokerage firms maintain internal authorization forms or procedures that allow powers of attorney to be reviewed in advance. Some institutions will place copies in their records and confirm that the designated agent can act when necessary.

While this process does not guarantee a completely seamless future experience, it often identifies potential problems before incapacity occurs.

An uncomfortable conversation during a routine planning review is far preferable to a crisis-driven conversation during a hospitalization.

Keep Documents Current

Age alone does not invalidate a power of attorney, but older documents frequently attract greater scrutiny.

When a twenty-year-old document suddenly appears during a medical emergency, institutions may ask additional questions regarding its continued validity.

Life changes can also create practical concerns. A named agent may have died, moved away, become estranged, or simply no longer be the best person for the role.

Regular reviews help ensure that documents continue to reflect a client's wishes and current circumstances.

The Accountant's Role

Accountants often find themselves at the center of these situations.

When a client becomes incapacitated, family members frequently call the accountant first. Questions arise regarding tax filings, Required Minimum Distributions, business operations, payroll obligations, and access to financial information.

In many cases, the accountant quickly discovers that the legal authority needed to address those issues is unclear or unavailable.

This is one reason why incapacity planning should not be viewed solely as a legal issue. It is also a financial and administrative issue. Effective planning requires coordination among attorneys, accountants, financial advisors, and family members.

Practical Steps Every Family Should Consider

The most effective incapacity plans are usually the simplest.

Clients should know where their original documents are located. Agents should understand their responsibilities before an emergency occurs. Financial institutions should be identified and, where appropriate, contacted in advance. Powers of attorney should be reviewed periodically to ensure they remain current and consistent with the client's goals.

Most importantly, families should recognize that signing a power of attorney is only the beginning of the planning process.

A power of attorney is valuable because it provides authority when someone can no longer act for themselves. But that authority is most effective when it has been thoughtfully coordinated with the institutions, advisors, and people who will eventually rely upon it.

The goal of incapacity planning is not merely to create documents. It is to create a system that works when it is needed most.