Based on multiple true events.
It’s maddening! Chelsea is stuck! Her father executed a power of attorney prepared by a local elder law attorney in 2020 (OK, it was me). The POA has all the necessary bells and whistles to enable Chelsea, his only child, to take care of any business matters that might come up after a possible incapacity.
After the death of his wife Ethel, Norman moved from Silver Pond to be closer to his daughter Chelsea in North Carolina (she and her husband Bill had moved from California some years ago).
Recently he had a serious stroke. Chelsea immediately stepped in to help because Norman named her as his agent under his power of attorney. Just a week before his stroke he told Chelsea he was afraid he would lose everything he had if he “ever got sick.”
The POA Problem
Dad has all of his investments and a modest IRA at Big Bank & Trust. There’s only one problem.

“We can’t use your power of attorney because bank policy requires that you use our form POA which has been pre-approved by Legal,” declares the banking rep with the assured authority of a TSA screener looking for contraband.
“But Dad has had a major stroke! We aren’t even sure how much he understands anything.” Chelsea just can’t believe this.
The banking rep must realize she was a bit harsh. With a comforting hand on Chelsea’s shoulder she assures her that she “can always bring a guardianship proceeding.” In fact, the banking rep helpfully offers the name of a local attorney to handle the guardianship.
The Other Attorney
Chelsea visited the attorney recommended by the bank. The attorney, a nice enough young man a year out of law school, explains the guardianship process and tells Chelsea that as guardian she’ll have all the authority she needs to pay all of Norman’s bills and expenses.
Chelsea was startled. “But what about transferring his assets to a trust? Or to me? Dad always said he was afraid of losing everything in case he went to a nursing home?”
“Sorry,” explained the nice enough young attorney, “but you’ll need court approval for that . . . and depending on what county you’re in, good luck with that!”
Despair . . . and Then POA Help

That evening Bill suggested that Chelsea return to that elder law attorney Norman had seen in 2020.
Chelsea appeared in my office and told me the sad tale of hers and her father’s situation (which you just read about).
I must admit, I wondered to myself why she hadn’t come to see me in the first place. I explained that North Carolina law is on her side. Read on to find out why.
If the Power of Attorney is Good, the Banks Must Honor It
Up until almost twenty years ago the refusal of banks and other financial institutions to honor otherwise valid powers of attorney was becoming a real problem. As with Chelsea and her father, it wasn’t always possible for the principal (Dad) to simply execute a new power.
Further, an institution’s form power may have contained provisions that the customer would rather not have in a power of attorney.
Finally, institutional legal departments (oftentimes hundreds of miles away in other states) were taking too long to review North Carolina powers of attorney.
The Uniform Power of Attorney Act (a model act that states can use to pattern their own statutes) came to the rescue. North Carolina’s current power of attorney statutes are based on this act.
Pardon the statutory citations . . . we do have some geek readers.
NCGS § 32C-1-120(b)(1) says a bank or other financial institution has seven business days to notify the agent under the POA (Chelsea) whether they intend to honor the power. As part of that process, the bank may require the agent to execute an affidavit. In the affidavit the agent swears that the power has not been revoked and that there are no conditions that would otherwise render the power invalid. Alternatively, the bank may ask for a legal opinion from the person’s attorney on any matter of law the bank is uncertain of.
Unless the bank is aware of some fact that would render the power invalid, it better honor the power of attorney and allow the agent to conduct business according to its terms. Being wrong has consequences.
Under NCGS § 32C-1-120(b)(3) a person cannot require a different form POA if the one presented appears to be valid. Bad, bank, bad!
If a bank refuses to honor a power of attorney, the agent may initiate a special proceeding before the clerk of the superior court to render a decision as to the validity of the power of attorney. NCGS § 32C-120(e). The validity of the POA will be the only issue on the table.
If the power of attorney is found to be valid under North Carolina law, the institution is liable for the costs and attorney’s fees incurred in bringing the proceeding. Of course, if the agent was fibbing a bit and the power wasn’t valid because it had been revoked, for example, the agent would be on the hook.
Bottom Line: POA Problem Fixed
A few phone calls to the bank legal department, with a discussion of North Carolina law, quickly straightened the problem out. I have threatened the procedure on several occasions and have never had to follow through with a special proceeding. The financial institutions don’t want the hassle.
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