We’ve long had problems with banks or other financial institutions not accepting perfectly valid durable powers of attorney. They often apply a “staleness” doctrine, declining older documents while accepting newer ones. This is not found in the law and in some ways is quite perverse — an incapacitated senior was more likely to have been competent to appoint agents 10 years ago than 10 weeks ago.
Durable Power of Attorney Solutions
There are several “work arounds” for this problem, including:
- Executing new durable powers of attorney every few years.
- Some banks and financial institutions have their own durable power of attorney forms that they prefer. So we advise clients to check with the institutions where they have accounts to see if they have additional forms they can complete.
- Creating and funding revocable trusts. Banks and financial institutions are more comfortable with these.
- Adding someone else to your accounts. Joint owners have all the powers of single owners, so this avoids any issues with the financial institutions — but can create other problems. For instance, the joint owner inherits the account upon the death of the primary owner.
- Going up the chain of command. Sometimes it’s possible to get a financial institution’s legal department to honor a durable power of attorney, especially if you threaten legal action. Unfortunately, this usually requires hiring an attorney at extra cost and delay.
- Getting appointed as conservator, though one of the reasons to set up a durable power of attorney in the first place is to avoid the need to take this step.
Now, Personal Representatives
All of this is preamble to the newest problem lawyers and their clients are facing with banks, especially with the Bank of America. It will not allow co-personal representatives (executors) appointed under a will to open an estate account, only single personal representatives.
Apparently this is because, at least technically, both personal representatives must sign all checks and carry out other financial transactions and the banks’ systems can’t account for that requirement. People commenting on-line have reported that the Bank of America will issue a check payable to the estate for such accounts, but that they have had challenges opening dual personal representative accounts at other institutions, especially large national banks.
Again, this is totally contrary to the law which allows the appointment of any number of personal representatives (though we usually counsel against naming more than two because three or more can make communication and coordination more difficult).
Solutions
So what remedies are there? The answers are different based on whether you are dealing with an estate with an account at the Bank of America or another institution with a similar policy or are still alive with an account at Bank of America.
Starting with an estate, here are some possible strategies:
- Seek a court order that Bank of America allow both personal representatives to manage the account.
- A threat to do go to court may or may not do the trick.
- One or more personal representatives can resign so that only one remains and falls within Bank of America’s rules.
- Seek out a smaller, local bank that may be able to accommodate two or more personal representatives on the account.
- Run everything through your lawyer’s escrow account.
Unfortunately, all these solutions involve lawyers and adds cost and delay to the administration process. Here are some steps you can take now if you have an account at the Bank of America to make sure your personal representatives don’t face these problems:
- Move your accounts out of the Bank of America. (Of course, any other financial institution may adopt the same policy — we just haven’t faced it yet.)
- Appoint only a single personal representative at a time.
- Take steps to avoid probate, including adding a joint owner to your account, naming beneficiaries or transferring it to a revocable trust. Some of these steps may make sense as planning measures on their own.
It’s unfortunate that the Bank of America and other financial institutions have this policy that adds to the difficulties and costs of administering estates. They should come up with a solution for the benefit of their account holders.