When a Bank Won’t Accept Your New Jersey Power of Attorney

When you make the investment in choosing a trusted person to manage your affairs if you become incapacitated and executing a power of attorney, you should be able to rest assured that your interests are protected. When you agree to take on power of attorney for a loved one if necessary and he or she creates a durable power of attorney, you should be able to fulfill your obligations unimpeded. However, those attempting to act under a New Jersey power of attorney often report difficulties with financial institutions.

New Jersey Banks Must Accept Properly Executed Powers of Attorney

The New Jersey legislature has provided an added layer of protection for those who execute powers of attorney and those charged with managing another’s affairs under them. NJ Rev Stat § 46:2B-13 (2017) mandates that banking institutions accept a properly drafted and executed New Jersey power of attorney.

The law provides limited exceptions. A banking institution shall refuse to rely on a power of attorney if:

• The signature of the principal is not genuine, or
• The employee of the banking institution who receives, or is required to act on, the power of attorney has received actual notice of:
  • the death of the principal,
  • the revocation of the power of attorney, or
  • the disability of the principal at the time of the execution of the power of attorney

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The bank may also refuse to honor a New Jersey power of attorney if it has a good faith belief that the power of attorney is not authentic, that the principal is deceased, that the power of attorney has been revoked, or that the principal was under a disability at the time of execution. Finally, a financial institution is not required to honor a power of attorney that is first presented more than 10 years after execution, or that has not been acted upon for a period of 10 years. However, this last exception does not apply if the appointed agent is a parent or spouse of the principal, or the descendant of a parent of the principal.

Ensuring that Your New Jersey Power of Attorney is Honored

The first step toward ensuring that your New Jersey power of attorney is effective is making sure that it is drafted in accordance with the specifications set forth in the New Jersey Property Code. An estate planning attorney experienced with the drafting and execution of powers of attorney can be your best resource at this stage.

You may also want to refresh your power of attorney at intervals, perhaps even sooner than the 10-year period time frame applied to financial institutions. Not all businesses are legally mandated to accept powers of attorney, nor provided with the specific guidance the law directs toward financial institutions. Some may be understandably uncertain about a document that is several years old.

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Finally, educate yourself and be prepared to assert your rights. When you approach a financial institution with your power of attorney, be sure that you understand exactly what it does and does not authorize you to do. You will also want to familiarize yourself with the circumstances (described above) under which a bank is obligated to accept a power of attorney or may refuse to honor the document.

Be aware that the bank employee you first encounter may not be familiar with these regulations and procedures, or may simply not have the authority to make a determination about your rights under the power of attorney and how best to proceed. Calmly, firmly explain your rights and what you intend to accomplish, and work your way up the chain of authority as necessary.