By Jane Vock
Power of Attorney for Property (POA) is a legal document that gives a person the right to act on someone else’s behalf. This article is intended to share with your clients and their families with the recommendation that they seek professional advice.
Can a bank refuse a Power of Attorney?
Yes, they can! If you are you going to manage your parents’ finances in the future, do nott be seduced by a false sense of power the ironically named Power of Attorney gives you. It does not matter if your POA was drawn up by the best lawyer in town—the banks may not trust you and you need to plan for that.
They are not just throwing their power around because they can. Banks have a responsibility to protect people’s finances. Most of us have heard or read stories about fraud, theft of seniors’ savings, and financial abuse (with the equally disturbing fact that family members are usually the culprit).
It is an especially tough job for banks these days. With online banking and banking machines, you and your parents may be unknown to them outside of an online account or two. Because of this unfamiliarity, sometimes the pendulum swings too far and the bank refuses to recognize legitimate Powers of Attorney. Banks can refuse to accept a Power of Attorney because it is old, lacks clarity, or does not conform to the bank’s internal policies.
If you think that the above reasons are rather vague, I could not agree more. I have had clients’ legitamate POAs refused because:
•They had never met the son who had the POA.
•The POA was over 10 years old.
•The person with the account did not arrange to sign the bank’s own internal papers.
•The parent was not physically able to go to the bank to verify they gave their daughter a POA.
•A sibling called the bank and said this was a case of financial abuse.
While you do not always need a lawyer to draw up a POA (there are free kits available you can complete without a lawyer), I have always advised the use of a lawyer. In my experience, banks are even more suspicious with do-it-yourself POAs, even though they are still a legal document. It is also advisable to have a lawyer complete your POA if there is even a hint of conflict between siblings (and this is no time to be naïve or sentimental).
This is not fear-mongering or a tirade against the banks. I have simply had too many experiences with sons and daughters who have had a legitimate POA denied by the bank. You can imagine the stress involved under this situation. The banks can freeze accounts, in order to investigate “suspicious activity.” This can even make it difficult to pay bills.
If suspicious, the banks can ask for a capacity assessment to be completed or a letter from the family doctor confirming that your parent is capable. While inconvenient and sometimes costly, this is not always possible, as sons and daughters are involved only when their parent becomes incapable of managing their finances themselves.
What to do when a bank refuses your POA
Banks are now obligated to provide recourse to clients (your parents) or attorneys when they refuse to act on a POA or attorney’s (you as son or daughter) instructions. The Advocacy Centre for the Elderly (ACE) recommends the followingsteps in the face of a refusal to do so.
1) Consult a lawyer.
2) Contact the bank’s Office of the Ombudsman (all five major banks in Canada have one).
3) If unresolved, escalate to the Ombudsman for Banking Services and Investments (OBSI).
It can be quite challenging, not to mention time consuming and exasperating, to resolve the issue of POAs not being recognized by the banks. It does not have to play out this way. You and your parents can be proactive and prevent this problem!
Take these steps to get your POA recognized by the bank
• Go to the branch with your parents. Have your parents introduce you to the bank manager.
• Do it early, when there is no question of capacity.
• Take the POA to the bank and have it reviewed and accepted. If there are problems with it from the bank’s perspective, these can be addressed while there is no question of capacity. Your parents should ask the bank if they also have their own internal documentation required, which will give someone the power to manage their finances.
Are you surprised by any of this information? Do your clients have both their POA’s in place? Now is the time to encourage them to get their affairs in order.
Jane Vock is a social worker with over 25 years of experience working with individuals, couples and families. For the last 15 years, her passion and focus has been on improving the lives of caregivers and their families.