We recently had an issue with a bank refusing to accept a durable power of attorney prepared for a client by our firm. In 2015, the client properly executed the durable power of attorney designating her two daughters to serve as co-agents with the express authority to conduct banking transactions. The client is now physically incapacitated. When the client’s daughters presented the durable power of attorney to the bank, the bank refused to accept it.
Now what?
A power of attorney is a legal document delegating authority from one person to another. The maker of a power of attorney (the “principal”) grants an agent or agents the right to act on the principal’s behalf. The Florida Power of Attorney Act (the “Act”), effective as of October 1, 2011, significantly changed powers of attorney in Florida. The Act provides protection to principals and clear guidance to agents as to their rights and responsibilities under a power of attorney. A power of attorney signed after October 1, 2011 is effective as soon as the principal signs it.
A power of attorney terminates upon the incapacity or death of the principal. However, there is a special type of power of attorney, known as a durable power of attorney, which remains effective following a principal’s incapacity. A durable power of attorney generally alleviates the need for a court-appointed guardian to act for an incapacitated principal.
Under the Act, a third party is required to accept or reject a power of attorney within a reasonable time. For banks and financial institutions, four business days is presumed to be a reasonable time to accept or reject an agent’s authority if the power of attorney contains the specific authorization to conduct banking or investment transactions. While it is reasonable for a third party to have time to consult with a lawyer or an internal legal department, any delay exceeding a brief period of time may be unreasonable.
A third party that in good faith accepts a power of attorney may rely on it and seek to enforce any obligation created by the agent on the principal’s behalf. Under the Act, there are limited circumstances in which a third party may reject a power of attorney and the reason for its rejection must be set forth in writing. Some reasons for which a power of attorney may be rejected include the third party’s notice that the power of attorney or the agent’s authority is invalid, void, suspended, or terminated; the third party is not obligated to engage in business with the principal in the same circumstances; or the third person knows that there is an allegation of abuse by the agent and an investigation is pending. A third party that improperly rejects a power of attorney is subject to a court order mandating acceptance and to liability for damages including reasonable attorney’s fees and costs.
In the case of our client’s daughters who were seeking to exercise their rights under a valid durable power of attorney, the bank ultimately accepted it once our firm explained the provisions of the Act to the bank officer.
If your power of attorney is ever rejected, please call our office. A third party may not understand the implications of refusing to accept an otherwise properly executed and valid power of attorney. If your power of attorney was executed prior to October 1, 2011, it remains valid but is not eligible for the expedited review period required for banks and financial institutions described above. In this case, it would be prudent to contact our office to have a new durable power of attorney prepared and executed pursuant to the Florida Power of Attorney Act.