The Bank Says I Need Guardianship for Mom

HNWElder Law, Guardianship Law

By Fredrick P. Niemann, Esq. of Hanlon Niemann, a Freehold, NJ Guardianship Attorney

I hate the arrogance of many banks and brokerage firms. They often times make my professional life and that of my clients difficult, especially when it comes to Powers of Attorney (POA’s).

Here’s an example of what we typically go through.

A client presents to the bank the Power of Attorney (POA) we prepared for Mom which she signed in our office. It’s a general Durable Power of Attorney, giving her son/daughter the ability to do banking on Mom’s behalf as well as other powers that might be necessary on her behalf in the future, such as changing investments, accessing retirement accounts, cashing in life insurance policies, and selling real estate.

We tell clients to anticipate problems. Financial institutions prefer that their customers sign a POA on their form in their presence. Why? Because it is easier for them. They don’t have to worry about whether the POA is valid, whether the agent has the right to access the account on the principal’s behalf. In my example, the bank told the agent that Mom would need to come into the branch with him/her to acknowledge the POA or sign a new one.

That, however, was not possible because Mom has advanced dementia. She is no longer competent to sign or acknowledge anything. When the child/agent told the bank manager this, the manager replied, “well then you’ll need to apply for guardianship to access her account. We don’t accept outside powers of attorney”.

Why? Most banks, etc. do not have a specific reason for refusing to honor a POA.   Instead they say 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.

What happened here is not uncommon. The bank was categorically rejecting all POAs. Mom’s personal representative was understandably upset. “What’s the point of having a power of attorney if banks won’t honor it”, she asked. I completely understand her frustration. I also know that the bank is wrong and it’s policy is in direct violation of New Jersey’s Power of Attorney statute.

New Jersey law 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 Mom’s case, the bank has not acted in good faith. 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 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. The daughter agent 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.

To discuss a Power of Attorney issue or a NJ guardianship, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at Please ask us about our video conferencing consultations if you are unable to come to our office.

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