In this week’s post we continue with the topic of power of attorney and specifically how to handle resistance from banks and financial institutions. Last week I outlined the scenarios in which a bank can refuse to honor a power of attorney. New Jersey law says that a banking institution does not have to accept the agent’s authority to act if it has actual knowledge of or believes in good faith that the POA is not genuine or has been revoked or that the principal is dead or was under a disability when he/she signed the POA. But what does “good faith” really mean?
The statute defines good faith to mean when something is done honestly, regardless of whether it is done negligently. So let’s look at the common occurrence that I mentioned in Part 1 (my post on 7/30/18), in which the bank insists that the POA be its own form. Is that acting in good faith?
I would submit that it clearly it is not acting in good faith because the bank in this case has found nothing wrong with the POA that was presented to it. It simply would prefer – for its own convenience and protection – that its own document be used instead. This completely ignores the law. The bank is not acting “honestly”.
What about a bank that says the document is too old. I have been told by some bank personal that “we refuse to honor any POA that is older than (insert number here) years”. As I explained last week the law says that a bank can refuse to honor a POA first presented to it more than 10 years after its date unless the agent is a spouse, parent or descendant of a parent of the principal. Categorically rejecting every POA that is more than 10 years old regardless of who the agent is, again ignores the law. A bank does not act in good faith when it plainly ignores the law and substitutes its own rules.
So, the next time you run up against resistance it is helpful to be armed with a little knowledge of the law. Chances are the bank employee you are dealing with will know less about the law than you do and is just repeating “bank policy” without realizing that this policy may actually ignore and circumvent the law.