When the Bank Won’t Accept Your Power of Attorney
Even a perfectly prepared and executed power of attorney (POA) can be rejected or called into question by a third party. Banks, brokerage firms, insurance companies, and other institutions often raise objections when presented with a POA by the named agent. They may demand proof that the POA is still valid or complain that the power of attorney is “stale” – i.e. was executed too long in the past.
Some third parties will not honor a POA without a “Medallion guarantee” through a participating bank. Others may try to demand that its own form be used or that certain internal requirements of the third party be met.
In some situations it may be easier to meet the third party’s requirements rather than fight them. But in other cases those requirements may be onerous or impossible to meet. If you are in one of those difficult situations, be aware that the law provides you with tools you can use to get your existing POA accepted. Read on to find out more.
Where Government Benefits are NOT involved:
Various provisions of Nebraska law provide the person seeking to act as agent with the means to limit the potential for rejection of a power of attorney by non-governmental entities. Key provisions are located in Part 40 of Chapter 30 of Nebraska Revised Statues, the Nebraska law governing POAs.
The issue of “staleness” is effectively refuted by section 30-4010(3) which states that unless the power of attorney states a time of termination, it is valid notwithstanding the lapse of time since its execution. In addition, section 30-4019 allows the person who is asked to rely upon a power of attorney to rely upon a sworn statement of the agent as to any factual matter concerning the principal, agent or power of attorney.
To further facilitate the acceptance of powers of attorney, Section 30-4020 places an affirmative duty on third parties to accept a power of attorney or request a certification within seven days of presentation. Third parties who fail to comply are subject to court order mandating compliance and liability for attorney fees and costs incurred in seeking enforcement.
Occasionally an institution will demand a Medallion guarantee. The Securities and Exchange Commission describes a Medallion guarantee as a type of signature guarantee that most transfer agents will require before they process the transfer or sale of any securities you hold in your own name (i.e., in certificate form as opposed to your broker holding them for you in street name). You can get a Medallion guarantee from any commercial bank, savings bank, credit union, or broker-dealer that participates in one of the Medallion signature guarantee programs. While it can be argued that requiring a Medallion is inconsistent with Nebraska law, the easiest solution when this situation is encountered is usually to obtain the Medallion guarantee.
Where Government Benefits ARE involved:
Most people who receive federal benefits are able to manage their own financial affairs. However, some beneficiaries are unable to manage their benefits because of physical and mental problems. When this happens, the federal agency issuing the benefit check may appoint a representative payee to manage the benefit amount.
The following government agencies administer programs that may refuse to recognize the authority of an agent acting pursuant to a power of attorney:
A. Social Security Administration;
B. Office of Personnel Management; and
C. Railroad Retirement Board.
Instead, each of these agencies has its own rules for determining whether a payee is needed and who the appropriate person or program will be. They may also impose additional requirements and restrictions such as requiring the filing of an annual “Representative Payee Report” stating how the benefits have been used.
One practical work-around that some people use to circumvent these agency requirements is to have the government benefit check direct deposited into a bank account. The power of attorney is then used to access the funds after they are deposited.
This work-around is not approved by the agencies. They specify that if you have POA for a beneficiary who is found incapable of managing their own benefits, you must still file an application to serve as representative payee.
It can be helpful in drafting a power of attorney to include specific authorization for the agent to sign government agency forms, such as IRS Form 2848 or VA Forms 21-22 or 21-22a. This specific authorization may allow the agent to sign the government form appointing himself or herself as representative.