Can Banks Refuse to Honor a Valid Power of Attorney?

The statute governing Durable Powers of Attorney, address this very issue. It’s helpful to remind folks that there are three parties involved in the use of a Durable Power of Attorney (commonly referred to as a DPOA). First there is the person who assigns such power to act, by signing the document. This person is known as the Principal. Secondly, there is the person who is given the authority and power by the Principal. This person is known as the Agent. Thirdly, there all other persons or entities to whom the document is presented. These parties are defined in Chapter 709, Fl. Statutes, as “third persons”. Even though the word persons is used, it refers to and includes banks, brokerage firms, insurance companies, the IRS, real estate transactions, and other entities, as well as individual persons.

The laws created under Chapter 709 are intended to both enhance the utility of a Durable Power of Attorney, and on the other hand, to protect banks and other third persons from liability. “Third Persons” are rightly concerned about a DPOA, being created or used for fraudulent intentions. Imagine a criminal minded person, forging a signature on a DPOA, presenting it to a principal’s bank, to steal from the principal by draining their bank account. The bank and the Principal need protection in this situation. On the other hand, financial and legal responsibilities of the Principal continue, and it useful, and sometimes vital, to have a designated agent to carry on, in one’s stead. Both the banking and legal industry had input into the drafting and enactment of this very important statute.

This balancing act to protect all interests includes the procedures that must be followed if a third person such as a bank is presented with a DPOA. These are set forth in Section 709.2120 Fla. Statutes. First, the bank is limited in time to reject the validly executed Durable Power of Attorney to four days, excluding weekends and holidays. In other words, the agent cannot be blocked from acting on the Principal’s behalf, for an indefinite period of time.

An example is useful. A mother has a prolonged hospitalization due to a stroke. Meanwhile, the monthly mortgage, electricity, water, and cable bills are not being paid, and late fees are being assessed. Mom has sufficient money in her checking account to pay the bills. Her daughter, whom she has designated as her agent, presents the valid DPOA to the bank, in order to withdraw money from her mom’s account to pay these outstanding debts. The bank has four days to honor the withdrawal request, unless any limited exceptions to this rule exist.

These exceptions are specifically identified in the statute. It provides the bank with assurances that DPOA remains valid. In other words, that the Principal has not since revoked the agent’s authority, or that the Principal has not died, thereby extinguishing the power. Such bank can ask the agent, to give them a signed and sworn written statement to that effect. This is known as an affidavit. In fact, the statute includes a sample affidavit, again in the intent of the legislature, for fairness to all parties. An agent can expedite the bank transaction by signing and presenting such affidavit to the bank or other third person, by using the statutory form. The form is presented at the end of this blog for ease of reference.*

Lastly, if the “third person” such as a bank, does not follow the procedures in the statute, the agent has the legal right under the statute to sue them to compel acceptance and recover the attorney’s fees for such action. If you, as an agent, believe a bank has unlawfully rejected a valid DPOA, you should contact a qualified attorney, to assist you.

 

STATE OF FLORIDA COUNTY OF
Before me, the undersigned authority, personally appeared (agent) (“Affiant”), who swore or affirmed that:

  1. Affiant is the agent named in the Power of Attorney executed by (principal) (“Principal”) on (date).
  2. This Power of Attorney is currently exercisable by Affiant. The principal is domiciled in (insert name of state, territory, or foreign country).
  3. To the best of Affiant’s knowledge after diligent search and inquiry:
    • The Principal is not deceased;
    • Affiant’s authority has not been suspended by initiation of proceedings to determine incapacity or to appoint a guardian or a guardian advocate;
    • Affiant’s authority has not been terminated by the filing of an action for dissolution or annulment of Affiant’s marriage to the principal, or their legal separation; and
    • There has been no revocation, or partial or complete termination, of the power of attorney or of Affiant’s authority.
  4. Affiant is acting within the scope of authority granted in the power of attorney.
  5. Affiant is the successor to (insert name of predecessor agent), who has resigned, died, become incapacitated, is no longer qualified to serve, has declined to serve as agent, or is otherwise unable to act, if applicable.
  6. Affiant agrees not to exercise any powers granted by the Power of Attorney if Affiant attains knowledge that the power of attorney has been revoked, has been partially or completely terminated or suspended, or is no longer valid because of the death or adjudication of incapacity of the Principal. (Affiant) Sworn to (or affirmed) and subscribed before me this day of (month), (year), by (name of person making statement)
    (Signature of Notary Public-State of Florida)
Personally Known OR Produced Identification
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