How to Deal with Banks and Brokerage Firms When Using a Power of Attorney

HNWEstate Planning

Power of AttorneyBanks are a pain in the *&s! when it comes to using a Power of Attorney.  If an employee of the bank reviews the original power of attorney and knows, or has reason to believe, that the signature on the document is not the genuine signature of the person who created it, the bank will not recognize the document.  If the bank has actual knowledge or a good faith belief that the person who executed the power of attorney (the principal) died, or the Power of Attorney has been revoked, or that the principal was under a disability at the time of execution, the bank is not obligated to rely on the document.

  • J.S.A. 46:2B-13 mandates banks to accept a Power of Attorney when executed in accordance with state law except for a few situations.

A Power of Attorney is no longer legal upon the passing of the principal, so if the bank knows the person has passed away, the Power of Attorney is void and the account will be frozen until the executor or administrator comes along to liquidate the bank account.

New Jersey law also allows banks to not recognize a Power of Attorney if it is more than 10 years old, or if the document hasn’t been used for a 10-year period.  The exception to this rule is if the power of attorney is given to the principal’s spouse, parent or a descendant of a parent of the principal; then the 10-year rule doesn’t apply.  In addition, if the power of attorney provides that it “shall become effective only upon the disability of the principal” or similar words, the banking institution is not obligated to rely on or act pursuant to the power of attorney unless the banking institution is provided by the agent with proof to its satisfaction that the principal is then under a disability.  Often times, the power of attorney says how disability is determined, such as having two doctors sign affidavits certifying the principal to be disabled.  But in the absence of language, the bank may set its own policy about how to prove if the principal is disabled.

If the bank chooses to reject the power of attorney, it must give notice addressed to the addressee provided in the Power of Attorney and the reason(s) for the rejection.  Most banks require an original Power of Attorney and make a copy of it for their file.  But if the power of attorney does not have an original available, the statute allows it to accept a photocopy of the power of attorney certified to be a true copy of the original by either (1) another banking institution or (2) the County Clerk’s office if the document was recorded.

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

Written by Stephen W. Kornas, Esq. of Hanlon Niemann & Wright

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