Opening a power of attorney bank account for parent

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Opening a power of attorney bank account for parent

Postby Browser » Sat Jul 13, 2013 5:09 am

Can I use my durable power of attorney to establish a new bank checking account in my elderly mother's name, which I can use to manage her finances without needing to inform her of the account's existence?

I manage all my elderly mother's financial affairs. However, she has recently become untrustworthy regarding checkwriting and withdrawals from the primary checking account that I rely on, which we hold jointly. So I've had to freeze the account, which can still receive deposits, but withdrawals cannot be made except in person at the bank. In lieu of using that account for payments I've begun using another checking account in my name only to pay her bills and expenses, and transferring her social security, pension, and other income deposits from the joint account into my account in order to keep those funds out of her reach. In addition to the inconvenience, I realize this isn't a great arrangement since it might cause problems with the IRS and potentially with Medicaid application that might occur down the road, due to the fact that I might need to document and prove that these transfers from the joint account to my account were't gifts or misuse of her funds. I believe that it's important to keep a clean separation between her money and my money.

I'd like to establish a new account in her name to use instead of using the account in my name, but do so in such manner that she won't be aware of it's existence. I've become aware that I might be able to establish such an account by requesting a bank to open a power of attorney checking account in her name. This would not require her involvement as I understand it, and I would have full authority with the DPOA to use this account to receive deposits and to make payments and withdrawals in her behalf. I'd appreciate some knowledgeable advice regarding this option. Can it be done, how is it done, will it allow me to accomplish my objective, are there any downsides, and so forth?
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Re: Opening a power of attorney bank account for parent

Postby CaliJim » Fri Jul 19, 2013 10:06 pm

I don't have any experience directly - but I think the best thing would simply be to go into your bank with your DPOA document, and have a face-to-face with a bank officer. Explain everything that you just said above, and see what they say. What happens, I suspect, and I'm no lawyer, just a random guy on theinternet, is that what they can do for you will have more to do with bank policy than with law.

If you do this - let us know what you find out.

Best of Luck and good on you for looking after mom.
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Re: Opening a power of attorney bank account for parent

Postby kaneohe » Fri Jul 19, 2013 11:28 pm

I used to think that a POA worked as you think. It may be that it's supposed to work that way but my real world experience is
quite different. I have never had an institution accept the POA that I have on its own. Most want you to use their own form which, unless you have great future vision as to which institutions you would use, could make it difficult to execute when the time comes because of the competency of the other person. The only time I did get an institution to accept my POA I needed to have the other person fill out an affidavit that the POA was valid and that I was the person named in the POA. Again that could have been difficult if the other person was not competent.

Wishing you success in your endeavor but if I were a betting person.............
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Re: Opening a power of attorney bank account for parent

Postby mephistophles » Sat Jul 20, 2013 12:39 am

Check with attorney.
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Re: Opening a power of attorney bank account for parent

Postby SnapShots » Sat Jul 20, 2013 8:44 am

Why not tell the bank you want a new bank account number for your mom because of some fraudulent charges being made on it and close the old account. Wouldn't a new account number solve the problem? It's still her account and you're still on it. And, don't give her any of the new checks. Why does she have any checks?

What a creative idea to make it a requirement someone has to show up in person to cash a check. Keeps out-of-staters and out-of-country folks out of the checking account.
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Re: Opening a power of attorney bank account for parent

Postby CaliJim » Fri Jul 26, 2013 12:58 pm

So... OP... what happened?
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Re: Opening a power of attorney bank account for parent

Postby dm200 » Fri Jul 26, 2013 1:36 pm

kaneohe wrote:I used to think that a POA worked as you think. It may be that it's supposed to work that way but my real world experience is
quite different. I have never had an institution accept the POA that I have on its own. Most want you to use their own form which, unless you have great future vision as to which institutions you would use, could make it difficult to execute when the time comes because of the competency of the other person. The only time I did get an institution to accept my POA I needed to have the other person fill out an affidavit that the POA was valid and that I was the person named in the POA. Again that could have been difficult if the other person was not competent.

Wishing you success in your endeavor but if I were a betting person.............


The specifics of a POA depend, in great part, on the laws and regulations of your state. Many states have changed the laws and rules in recent years, so past experiences may no longer be relevant or true. The requirement of many financial institutions and other organizations (such as mutual fund companies, brokers, etc.) to insist on their forms being used and that a POA is not recognized just because it is "too old" are no longer allowed in some states. In Virginia, for example, it can not be required to use a certain form, nor can a POA be rejected as "too old". The institution can request verification that the POA is valid. They may also have an affidavit signed that states the issuer of the POA is still living.

I would go to a bank or credit union, and explain exactly what you have (the documents) and what you want to do. In preparation, maybe (not sure) an internet search of applicable state law and regulation might help. This link is a rather detailed description of the very significant changes a few years ago in Virginia. http://lawreview.richmond.edu/uniform-p ... orney-act/
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Re: Opening a power of attorney bank account for parent

Postby Gnirk » Fri Jul 26, 2013 2:01 pm

Even though my Durable Power of Attorney states I have the same powers as my mother, including banking, etc
Chase would not allow me to open a CD for her. We had a joint checking account, the DPOA was on file with the bank, and they hold her small IRA.

Chase recently informed me that I cannot use the DPOA to close the joint checking account where she is the primary unless I bring her into the bank. When I told them she is bed bound and in the final stages of Alzheimer's and is consequently unable to read, write, or understand, they said I still can't close the account. :x

Bank policy appears to override the DPOA powers.
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Re: Opening a power of attorney bank account for parent

Postby manwithnoname » Fri Jul 26, 2013 2:19 pm

Whether a POA will be accepted depends on state law. For example the NY Short form POA is a statutory document enacted under state law and all NY financial institutions including banks, securities firms and insurance companies are required to accept a validly executed POA without requiring that the institution's own form be used. The financial institution does not incur any liability in acting on the NY POA unless it has actual notice that the power is revoked or otherwise terminated.
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Re: Opening a power of attorney bank account for parent

Postby BrandonBogle » Fri Jul 26, 2013 2:47 pm

I have previously used a DPOA in Florida for my mother to open new accounts, close accounts, and do a number of things, at FIs that she was already a member of. None of the FIs had a problem with our form, but did have to send it in for review with their "legal processing" department.

However, it likely would be difficult to do this at a FI with no pre-existing relationship. This is because, while you have DPOA privileges to transact on her behalf, she still ALSO has the power to transact her. Because of this, "know your customer" requirements at most FIs require documentation from her to "prove" they have properly identified her.

Now, if you need an account that you have for her affairs, but she is NOT permitted to utilize, you will need an irrevocable trust or some type of custodianship/guardianship account. Both would require legal paperwork and the latter likely would require you obtaining a court order that she is no longer in charge of her faculties and incapable of caring for herself.

IANAL
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Re: Opening a power of attorney bank account for parent

Postby dm200 » Fri Jul 26, 2013 3:46 pm

BrandonBogle wrote:I have previously used a DPOA in Florida for my mother to open new accounts, close accounts, and do a number of things, at FIs that she was already a member of. None of the FIs had a problem with our form, but did have to send it in for review with their "legal processing" department.

However, it likely would be difficult to do this at a FI with no pre-existing relationship. This is because, while you have DPOA privileges to transact on her behalf, she still ALSO has the power to transact her. Because of this, "know your customer" requirements at most FIs require documentation from her to "prove" they have properly identified her.

Now, if you need an account that you have for her affairs, but she is NOT permitted to utilize, you will need an irrevocable trust or some type of custodianship/guardianship account. Both would require legal paperwork and the latter likely would require you obtaining a court order that she is no longer in charge of her faculties and incapable of caring for herself.

IANAL


This is a very good point - use of a DPOA does not preclude the issuer from transacting business. Of course, in a practical sense, the individual would need to know about the account to transact business.
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Re: Opening a power of attorney bank account for parent

Postby dm200 » Fri Jul 26, 2013 3:52 pm

Gnirk wrote:Even though my Durable Power of Attorney states I have the same powers as my mother, including banking, etc
Chase would not allow me to open a CD for her. We had a joint checking account, the DPOA was on file with the bank, and they hold her small IRA.

Chase recently informed me that I cannot use the DPOA to close the joint checking account where she is the primary unless I bring her into the bank. When I told them she is bed bound and in the final stages of Alzheimer's and is consequently unable to read, write, or understand, they said I still can't close the account. :x

Bank policy appears to override the DPOA powers.


Bank (or any financial institution, broker, etc) should not override applicable state law and regulation. If you are on strong ground about the applicable state law, then I would consider escalating the issue up the chain at Chase and, if that does not get the desired result, threaten (then go to) the CFPB and file a complaint.

Regarding this "joint checking account" - who are the joint owners? Read (or get and read) the complete account agreement. In general, most (but not all) bank and credit union account agreements allow any joint owner on that account to close the account. Having such wording in an account agreement (that you can cite) is likely to change their mind about this.
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Re: Opening a power of attorney bank account for parent

Postby BrandonBogle » Fri Jul 26, 2013 3:54 pm

dm200 wrote:This is a very good point - use of a DPOA does not preclude the issuer from transacting business. Of course, in a practical sense, the individual would need to know about the account to transact business.


Yes, which is exactly why I think the Op will have a hard time doing this in a manner that a) his mother doesn't know about and/or b) perfectly legal. Since she would have authority to transact on the account, any new FI will want their requirements for customer identification met. Which, for brick and mortar FIs, typically means seeing a government-issued id in person. The FI where the current account is at won't need to meet her to identify her since they already know who she is.

I will not go into the more nefarious ways of avoiding that.
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Re: Opening a power of attorney bank account for parent

Postby dm200 » Fri Jul 26, 2013 6:12 pm

BrandonBogle wrote:
dm200 wrote:This is a very good point - use of a DPOA does not preclude the issuer from transacting business. Of course, in a practical sense, the individual would need to know about the account to transact business.


Yes, which is exactly why I think the Op will have a hard time doing this in a manner that a) his mother doesn't know about and/or b) perfectly legal. Since she would have authority to transact on the account, any new FI will want their requirements for customer identification met. Which, for brick and mortar FIs, typically means seeing a government-issued id in person. The FI where the current account is at won't need to meet her to identify her since they already know who she is.

I will not go into the more nefarious ways of avoiding that.


This, I think, may be a situation where the financial institution is caught between (somewhat, at least) conflicting laws and rules. On the one hand, depending on state law, the financial institution may be obligated to honor the DPOA. On the other hand, there are the federal laws, rules, regulations about customer identification, anti-money laundering and so on. it is the right, as far as I understand, of the financial institution to contact the issuer of the POA. Of course, if it is "durable" (either as drafted or because of state law) and the issuer is alive, but not able to communicate. they would not be able to make that contact. As described by the OP, though, the issuer is not "impaired" in that way.
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Re: Opening a power of attorney bank account for parent

Postby BrandonBogle » Fri Jul 26, 2013 6:48 pm

Yup. And in that case, you would likely be told that you would have to take medical supporting documentation to a judge to get a guardianship granted and open such an account, since the person is no longer fit. I agree it's a bit of a catch 22.

Op, your best bet will likely be to have the current bank (if they accept your DPOA) to open a new account in her name with you as the DPOA. Then begin moving deposits over.
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.....

Postby pinecrest » Fri Jul 26, 2013 7:47 pm

.....
Last edited by pinecrest on Mon Feb 24, 2014 5:46 pm, edited 2 times in total.
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Re: Opening a power of attorney bank account for parent

Postby dm200 » Fri Jul 26, 2013 8:45 pm

pinecrest wrote:Does anyone know whether a POA has to transact business at the branch where the POA signature card was set up? I just became a POA on my Mother's account and would like to do business at any branch but realize I don't know if I can. I guess I'll find out sooner or later, but was wondering if anyone knows the answer offhand from their own personal experience.


That probably depends on the particular financial institution. Some banks and credit unions actually code the account on the computer system noting the POA on file and might actually have an image of the document(s) online. Others, though, might require you to go to a particular branch.
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Re: Opening a power of attorney bank account for parent

Postby SnapShots » Sun Jul 28, 2013 10:56 am

Gnirk wrote:Chase recently informed me that I cannot use the DPOA to close the joint checking account where she is the primary unless I bring her into the bank. When I told them she is bed bound and in the final stages of Alzheimer's and is consequently unable to read, write, or understand, they said I still can't close the account. :x

Bank policy appears to override the DPOA powers.


If your mother can't read, write, understand and is bed bound, why are you having problems? Since you're on the checking account, it sounds like you have total control.
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Re: Opening a power of attorney bank account for parent

Postby dbr » Sun Jul 28, 2013 11:18 am

SnapShots wrote:
Gnirk wrote:Chase recently informed me that I cannot use the DPOA to close the joint checking account where she is the primary unless I bring her into the bank. When I told them she is bed bound and in the final stages of Alzheimer's and is consequently unable to read, write, or understand, they said I still can't close the account. :x

Bank policy appears to override the DPOA powers.


If your mother can't read, write, understand and is bed bound, why are you having problems? Since you're on the checking account, it sounds like you have total control.


It is sad but true that sometimes caring for someone becomes easier when they are unable to "interfere." That is also why laws are written to prevent someone from taking advantage.

To the point, my experience has been that DPOA has worked just fine everywhere it was needed. Banks, etc., refusing to honor was not an issue.

One might want to be aware that two organization that definitely need their own process for cases like this are Social Security and the IRS, if there is any issue with filing tax returns, etc.

There is also the route of going to court to establish custody of a person that is found legally incompetent. I have no first hand experience with that but have seen others who have had to go that route, usually because the person cared for would never agree to a DPOA.
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Re: Opening a power of attorney bank account for parent

Postby dm200 » Sun Jul 28, 2013 2:23 pm

SnapShots wrote:
Gnirk wrote:Chase recently informed me that I cannot use the DPOA to close the joint checking account where she is the primary unless I bring her into the bank. When I told them she is bed bound and in the final stages of Alzheimer's and is consequently unable to read, write, or understand, they said I still can't close the account. :x

Bank policy appears to override the DPOA powers.


If your mother can't read, write, understand and is bed bound, why are you having problems? Since you're on the checking account, it sounds like you have total control.


The OP, stated " However, she has recently become untrustworthy regarding checkwriting and withdrawals from the primary checking account that I rely on, which we hold jointly."
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Re: Opening a power of attorney bank account for parent

Postby sperry8 » Sun Jul 28, 2013 2:30 pm

dm200 wrote:
SnapShots wrote:
Gnirk wrote:Chase recently informed me that I cannot use the DPOA to close the joint checking account where she is the primary unless I bring her into the bank. When I told them she is bed bound and in the final stages of Alzheimer's and is consequently unable to read, write, or understand, they said I still can't close the account. :x

Bank policy appears to override the DPOA powers.


If your mother can't read, write, understand and is bed bound, why are you having problems? Since you're on the checking account, it sounds like you have total control.


The OP, stated " However, she has recently become untrustworthy regarding checkwriting and withdrawals from the primary checking account that I rely on, which we hold jointly."


Just take away her checkbook and tell her you will handle all check writing going forward. No need for the POA or to change anything.
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