Your Power of Attorney – Will Banks Accept It?
Some families treat your power of attorney for financial matters as the “financial finish line.” The attorney drafts it, you sign it, and it goes into a folder for safekeeping. But if illness, memory loss, or an accident left you unable to handle your finances tomorrow, would the person you named be able to step in right away?
In this video, I walk through a practical step that often gets skipped after the legal documents are signed: making sure your bank and brokerage firm are ready to work with the person you chose.
I’m not an attorney, and this isn’t legal advice. It’s about being financially prepared.
A signed document like your power of attorney isn’t the same as an accepted one
Your attorney can write an excellent power of attorney.
But getting a bank or brokerage firm to act on your power of attorney is a separate step. And each institution has its own process.
Before you get to that step, be clear on three things with your attorney regarding your power of attorney for financial matters:
- What can your agent do? The document spells out the powers you’re granting.
- When does the authority begin? Some documents are effective right away. A “springing” power of attorney begins on a specified event, often incapacity.
- Does it continue through incapacity? A durable power of attorney generally does. A non-durable one generally does not.
Expect extra paperwork. And expect to wait.
In my experience, brokerage firms usually want their own forms alongside your power of attorney drafted by your attorney.
It does NOT mean they’re rejecting your document, your power of attorney.
It means there are more steps before your agent can act.
Banks can still require identification and take time to review.
Brokerage accounts follow their own procedures when it comes to your power of attorney.
And one institution’s process won’t cover your accounts at another bank or firm.
These procedures exist mainly to protect you.
But they take time, so don’t count on same-day approval.
Questions to ask each bank and brokerage firm:
- What will be needed to review your power of attorney?
- Are there additional forms?
- Whose signatures are required?
- Does anything need to be notarized?
- If my document takes effect upon incapacity, what evidence will you need?
If any of those forms raise legal questions, take them to your attorney.
Know the limits, too
A Durable POA doesn’t mean “unlimited discretion.”
Ask your attorney what your agent can (and can’t) do with beneficiary designations, gifts from your accounts, or transfers that could benefit the agent personally.
Understanding the limits matters as much as understanding the authority.
Make the introduction before an emergency!
One of the hardest calls we get often happens when a client is hospitalized or incapacitated, and someone we have never met (or spoken with) has your power of attorney for financial matters calls up and needs money. It’s far better when we’ve already met that person and the paperwork is in place.
*Not legal advice. For Educational purposes only. Consult your own attorney about your documents.*
Links for Your Power of Attorney – Will Banks Accept It?
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Watch this episode (“Your Power of Attorney – Will Banks Accept It?”) on our YouTube Channel
Additional links of interest:
CFPB – Guides for managing someone else’s money:
CFPB – My family member signed a POA, but the bank says it has to be on their form:
NJ Revised Durable Power of Attorney Act (P.L.2000, c.109):
Transcript for Your Power of Attorney – Will Banks Accept It?
You had an attorney prepare your financial power of attorney.
You signed it, put it somewhere safe, and figured that part of your planning was finished.
But if an illness, or memory loss, or an accident…. left you unable to manage your finances tomorrow, would the person you chose actually be ready to help?
Has your bank or brokerage firm reviewed the paperwork?
Does your agent know what else might be required?
Those are the questions worth answering before someone needs to act.
I’m not an attorney, and this is not legal advice. This is about practical financial preparation and a step that families sometimes overlook after signing their legal documents.
By the way, if you’re new here, my name is Tom Mullooly. I own a financial planning and investment advisory firm here in Wall Township, New Jersey. And I work alongside my three sons, who are all certified financial planners just like me.
Your attorney may have drafted today’s version of the Magna Carta.
That still doesn’t mean your bank or brokerage firm has reviewed it — or is ready to let your agent act on your behalf.
A well-written document – and getting that document accepted by your bank or brokerage firm – are two different things.
So, think about (these) three questions.
What can your agent do?
When does the authority actually begin?
And does it continue through incapacity?
Because a durable power of attorney generally means the authority survives incapacity.
But a non-durable power of attorney generally does not.
A springing power of attorney means authority begins upon a specified event. Often, that’s incapacity.
Your attorney can explain when your document takes effect, and whether it continues if you become incapacitated.
Here’s where the practical problems could begin.
In my experience, brokerage firms usually want their own paperwork… alongside the power of attorney written by your attorney.
That might include an agent agreement or an affidavit, or some identification, and additional review is going to be needed.
It doesn’t necessarily mean they’re rejecting your attorney’s document.
It means that there’s more steps involved, before your agent can act on your behalf.
Some paperwork may require a notarized signature. Depending on the form, that could be your agent’s signature rather than yours.
And that might make the process easier if you’re already hospitalized or incapacitated.
But requirements vary, and submitting everything doesn’t necessarily mean approval “that afternoon.”
So keep in mind, there is a process involved, and these processes have been put in place primarily for the client, for your protection.
But it takes time to get things organized at a bank or at a brokerage firm.
New Jersey law requires banks to accept qualifying powers, powers of attorney… subject to some conditions.
Banks can still ask for identification requirements. And you should expect they will need time for review.
Brokerage accounts involve their own procedures. And you should expect they’ll also need time to do some review.
Don’t assume that one institution’s process will cover every account you own, and it likely won’t be the same… if you have an account at a different bank… or an account at a different brokerage firm.
Ask:
What will be needed to review your power of attorney?
Are there additional forms?
Whose signatures are required?
Does anything need to be notarized?
If my document takes effect upon incapacity, what evidence will you need for that?”
If those forms raise legal questions, bring them to your attorney.
There is another conversation worth having with your attorney…
What can your agent do about beneficiary designations? Or, can they make gifts from your accounts? Or can they make transfers that might benefit the agent personally?
Durable power of attorney does not mean unlimited discretion.
Understanding the limits matters just as much as understanding the authority.
So work with your attorney on the appropriate documents. Contact each and every brokerage firm and bank about their acceptance process. There is a process involved.
And it’s a good idea to please introduce your intended agent to your advisor – before an emergency.
One of the worst conversations we have is a phone call on a Monday morning that begins, “I am so-and-so’s daughter, and he’s in the hospital. I have his power of attorney, and we need to get money as soon as possible.”
That’s a tough one.
Again, I’m not an attorney. Your legal choices begin with you and your counsel.
My point is just being practical. Signing the document is important.
Making sure the people you trust understand the next steps is… part of being prepared.
