A power of attorney is only useful if the people and institutions you need to use it with will actually accept it. In Colorado, banks and other financial institutions have the legal right to review power of attorney documents carefully before honoring them, and there are circumstances under which they may decline to act on a document even if it appears valid on its face. Understanding how this process works can prevent significant delays when a family needs access to funds during a difficult time.
Why Financial Institutions Review Powers of Attorney Carefully
Banks take power of attorney review seriously because acting on a fraudulent or improperly executed document exposes them to legal liability. If a bank honors a power of attorney and the transaction later proves to have been unauthorized, the institution can face claims from the account holder or their estate. That risk makes financial institutions cautious, and many have internal compliance procedures that add steps to the review process beyond simply confirming the document looks valid.
Colorado law provides banks with a defined period to review a power of attorney before being required to accept it. During that window, the institution may ask for additional documentation, request a certification from the agent, or consult with its legal team. Delays of several days are common even for validly executed documents.
A Loveland power of attorney document that is drafted without attention to financial institution requirements is one of the most common reasons families encounter delays when they need access to funds during a health crisis or incapacity.
What Banks Typically Look For
When a Colorado financial institution reviews a power of attorney, it examines several specific features of the document:
- Whether it is signed by the principal and properly notarized
- Whether the document is durable, meaning it remains effective if the principal becomes incapacitated
- Whether the specific financial powers the agent needs are expressly granted
- Whether the document has expired or been revoked
- Whether the agent’s identity can be confirmed with acceptable identification
A document that is missing any of these elements, or that grants powers in vague or overly general language, may be rejected or cause significant delays.
Why Powers of Attorney Are Sometimes Rejected in Colorado
W.B. Moore Law is a Loveland, Colorado estate planning firm that has helped clients structure powers of attorney that meet the requirements of financial institutions, and the most common reasons documents are rejected involve drafting issues rather than fraudulent intent. Powers of attorney that were prepared without legal guidance often use language that is too general, fail to specifically authorize financial transactions, or lack the durability language that banks require. Some institutions also reject older documents on the basis of age alone, even when Colorado law does not require powers of attorney to be renewed periodically.
What to Do if a Bank Refuses to Honor a Colorado Power of Attorney
If a financial institution refuses to honor a validly executed Colorado power of attorney without a reasonable basis, Colorado law provides a remedy. An agent who is wrongfully refused can seek a court order compelling the institution to honor the document. The institution may also be liable for the agent’s attorney’s fees in pursuing that order. While this remedy exists, avoiding the dispute in the first place through proper drafting is a far better outcome for everyone involved.
Creating a Power of Attorney That Financial Institutions Will Accept
If you are creating or updating a power of attorney in Loveland or the surrounding area, speaking with a Loveland power of attorney attorney before finalizing the document is the most direct way to make sure it will function as intended when your family needs to use it.