Wondering why the bank won’t let you use that Power of Attorney?
by Linda Caisley
Powers of Attorney are powerful, and dangerous documents. They name someone (called an “Attorney”) to make decisions for you about your finances, and to sign for you if you’re not able to, or if you’re not around.
Unfortunately, just because you have a Power of Attorney, doesn’t mean you will be able to use it. Banks have to be very careful about letting you use a Power of Attorney for someone. There are many reasons why a bank might not let you use that Power of Attorney you have for your mother ‒ but here are some of the more common problems:
Using the Wrong Document, or a Document from Another Province
People can make their own Power of Attorney, or they can ask a notary to make one for them. But there are strict rules about what makes a Power of Attorney valid, and these rules change from province to province. If the document doesn’t comply with these rules, it might not be useable.
For example, if you are trying to use a Power of Attorney that was made in another province, or which was downloaded online from another province, state or country, that Power of Attorney might not be acceptable for BC purposes.
The Adult didn’t know what they were doing, or was talked into doing something they didn’t really want to do
If the person who made the Power of Attorney (the “Adult”) was not legally capable (“of sound mind”) at the time they signed the Power of Attorney, then the Power of Attorney is not effective, and you can’t use it. When dealing with Powers of Attorney, legally capable means that the Adult has to be able to understand:
the nature of their family and their assets,
their obligations to other people and family members,
the nature and consequences of what they’re doing,
what would happen if the Power of Attorney is abused,
what happens if they don’t have a Power of Attorney,
that they can revoke the Power of Attorney.
For example, if the Adult is an active drug user, or is on morphine, or has been diagnosed with an illness affecting their decision-making capacity, like Alzheimer’s, then the Adult might not be legally capable, and any Power of Attorney they make could be unusable.
One of the reasons you use a notary to draft a Power of Attorney (rather than doing it yourself) is because the notary will test the Adult to see if they have legal capacity. The notary will also ensure that the Adult is making the documents freely and voluntarily, and that no one is forcing the Adult.
Notaries will not make a document for an Adult who isn’t legally capable, or who is being talked into doing something they don’t want to do. So, assuming there are no other reasons to refuse the document, the bank will rely on a Power of Attorney made by a notary more readily than they would a homemade document.
Banks generally refuse to honour homemade Powers of Attorney unless they can somehow prove that the Adult had legal capacity at the time the Power of Attorney was made, and that no one was standing over the adult threatening them (emotionally or physically) if they didn’t sign it. Your word alone will not be enough.
The Power of Attorney doesn’t allow you to do what you are trying to do
Some Powers of Attorney are restricted. For example, if the Power of Attorney says “my Attorney can only use this document to sell my house”, then you can’t use the Power of Attorney to pay the Adult’s bills, or take money from their account ‒ you can only use it to sell their house.
You are trying to give the Adult’s money or assets away
You must always act in the Adult’s best interests, and giving the Adult’s money away to others, even if the Adult told you to do that, is not allowed with a Power of Attorney, unless the Power of Attorney includes specific permission to do so. Nor can you give away any assets that the Adult specifically gave away in their Will.
For example, you cannot take money from the Adult’s account and give it to charities or family members, even if the adult asks you to do this, unless the Power of Attorney specifically says that you can. Nor can you sell the Adult’s home, and split the money among your siblings. That money has to be kept for the Adult’s care, even if the Adult doesn’t actually need or want it. If there is money left over after the Adult has died, then the Executor would deal with it according to the Adult’s Will.
If the Adult is capable, they can make their own gifts or loans, but you can’t use a Power of Attorney to do that unless it has specific, written permission in the document.
The Power of Attorney was suspended, revoked or has come to an end
If an adult is legally capable, they can revoke a Power of Attorney at any time. If the Power of Attorney has been suspended or revoked, you can’t use it. Some Powers of Attorney expire.
The bank has no easy, immediate way to tell whether the Adult revoked the Power of Attorney you are showing them. They might want proof that the Power of Attorney hasn’t been suspended or revoked, or they might want you to make a statement under oath that, to the best of your knowledge, you believe the Power of Attorney is still valid.
So what if it’s a bad Power of Attorney ‒ why does the bank care?
Banks try hard to protect their clients’ assets from fraud, or theft. If you give the bank a Power of Attorney that isn’t legally binding, and you use that Power of Attorney to transfer the Adult’s money out of their account, the bank is liable for that loss. So the bank is going to be very, very careful about whether you have a proper, valid Power of Attorney or not.
Ask your notary for more information about what makes a Power of Attorney valid. Visit our website for contact information.