The bank told Mary they would not honor her mother’s power of attorney (POA), designating her as agent. They instead insisted she would need to apply for guardianship. Last week, I told you that the bank’s position violates New Jersey law.
Why? Because they did not have a specific reason for refusing to honor Mary’s POA. Instead they said they won’t honor any POA s which are not one of “their own”. New Jersey’s law on powers of attorney specifically states that “banking institutions shall accept and rely on a power of attorney which conforms to this act and shall permit the agent to act . . . provided that the banking institution shall refuse to rely on [the POA] if (1) the signature of the principal is not genuine, or (2) the employee of the banking institution . . . has received actual notice of the death of the principal, of the revocation of the POA or of the disability of the principal at the time of the execution of the POA.” The bank is not obligated to rely on the POA if it believes in good faith that one of these reasons is present.
The statute goes on further to state that if the bank refuses to honor the POA, it must provide in writing the reason for its rejection to the address provided to it by the agent. In Mary’s case, the bank has not acted in good faith. Mary’s mom is still alive. The bank has no basis to believe she revoked the document or that she was disabled at the time of the signing (that she lacked the legal capacity to sign). Mom signed the document in my office and I notarized it so it is clear the document is genuine.
As I said, the bank isn’t using any of those reasons. But, the law doesn’t allow it to reject the POA for any other reasons. I asked Mary for the phone number of the person at the bank she had been dealing with. When I called, that person put me in touch with someone in their legal department. Sure enough I got the same explanation of their “policy”. When I pointed out the language in the statute and that if we had to pursue guardianship, we would ask the court to order the bank to pay all attorney fees and court costs associated with an unnecessary legal action, he started to back pedal. “Maybe we can accept the POA,” he told me.
After an internal conversation within the bank, he called back and said everything would be OK. Mary would be able to access Mom’s account using our POA. Of course, it shouldn’t have been this difficult. The law is pretty clear on what a bank can and can’t do. But, the bank was looking out for its own interests in this case to the detriment of its customer. They are concerned about potential fraud. Requiring a court ordered guardian to be appointed in each case covers the bank. But the bank imposed a more restrictive process than what the law requires. What they can’t do is make their own rules if those rules violate state law.