Why You Need a Carefully Drafted POA (Part 1)

In this week’s blog post I want to talk about a call we received from a family member of a client whose power of attorney we prepared about 12 years ago.  The son who called was acting as agent for his mother and needed to access her IRA account.  The bank where it is located refused to allow him that access.

Over the years we have had many calls like this from clients who have run into problems with financial institutions.  This is usually caused either by the financial institution’s misapplication of the law or its insistence that it has a policy that differs from the law.  In this case, the bank told the son that the POA did not specifically reference retirement accounts so it refused his request.  That’s when he called us.

When I called the bank myself, the bank manager told me that the POA must by law specifically reference retirement accounts.  When I pressed her further she said the legal department that reviewed the document advised her of the bank’s position.  I asked whether their attorney was located here in New Jersey.  Not surprisingly, she said, “no, the legal department is in Ohio”.

I’ve seen this story before.  I told the manager that there is no specific section of the New Jersey Durable Power of Attorney Act that references IRAs.  She insisted that the bank’s attorneys had advised that there was.  I said that may be the case in Ohio where their legal department is located but New Jersey law applies.

The manager suggested that we have our client execute a new power of attorney with the language they requested.  I told her that was not going to be possible or necessary.  Next week I’ll tell you how we resolved the impasse.