When the Bank Says No: Why Maryland Powers of Attorney Get Rejected, and How Grant, Riffkin & Strauss, P.C. Drafts One That Works

The scene is familiar to us. A parent has a stroke or a dementia diagnosis, and an adult child goes to the bank with the power of attorney Mom signed years ago. The branch manager looks it over, sends it to the legal department, and a week later says no. Meanwhile, the mortgage payment and the assisted living bill are both due. At Grant, Riffkin & Strauss, P.C., we see this most often with older documents, and nearly always it could have been prevented when the document was drafted.

What is a durable power of attorney in Maryland?

A power of attorney is a document that lets one person, the principal, give another person, the agent, legal authority to handle money and property on the principal's behalf. A durable power of attorney keeps working after the principal becomes incapacitated, and that's the whole reason most families have one. Under Maryland law, a written power of attorney is presumed durable unless the document says it isn't. Maryland's rules are in Title 17 of the Estates and Trusts Article, known as the Maryland General and Limited Power of Attorney Act, which took effect on October 1, 2010.

Why do banks reject a power of attorney?

Usually it's because of how the document was drafted or signed, not who the agent is. The problems we see most often:

• The document predates October 1, 2010, so it follows older execution rules and isn't on the statutory form, which makes compliance departments cautious.

• It was signed with a notary but without the two adult witnesses that Maryland now requires.

• It's a "springing" power of attorney, meaning it only takes effect once the principal is incapacitated, and nobody has the doctor's letters the document requires.

• It doesn't clearly grant the specific power the agent is trying to use, such as changing a beneficiary or adding a name to an account.

• The bank has a policy of insisting on its own internal form.

Does Maryland law require a bank to accept a power of attorney?

It does for an acknowledged statutory form of power of attorney. Section 17-104 of the Estates and Trusts Article says a bank or any other person may not require an additional or different form for authority already granted in a statutory form. A bank that refuses in violation of that rule can face a court order requiring it to accept the document, plus liability for the reasonable attorney's fees and costs of getting that order.

That protection is tied to the statutory forms specifically. A custom-drafted power of attorney may be perfectly valid and still not carry the same leverage at the bank counter. Maryland also offers an optional agent's certification form in Section 17-204, which an agent can sign to confirm the principal is alive and the document hasn't been revoked. Banks often ask for it.

Which powers have to be written out specifically?

The powers that can change who inherits your property. On the Maryland Statutory Form Personal Financial Power of Attorney, an agent can make gifts, open a joint account with you, create or change survivorship rights, or change a beneficiary designation on life insurance, an annuity, or a retirement account only if you initiated that authority. For gifts, the form also has you choose who can receive them and how much, such as up to the federal annual gift tax exclusion or an unlimited amount for Medicaid or estate planning purposes.

These initials get skipped all the time. Then a parent needs nursing home care, the family wants to do Medicaid planning, and the agent has no authority to move a dollar.

How does Grant, Riffkin & Strauss, P.C. draft a power of attorney banks will accept?

We start from the statutory form and tailor it from there, so the document keeps the Section 17-104 protection while still reflecting the client's actual wishes. That means naming at least one successor agent, deciding deliberately on each specific power, and using the special instructions section for anything unusual.

Signing is where many documents fail later. Since October 1, 2010, a Maryland power of attorney must be signed by the principal, acknowledged before a notary, and signed by two adult witnesses. Maryland now also allows remote witnessing under an attorney's supervision, with its own requirements. If the agent may need to sell or refinance real estate, the power of attorney will need to be recorded with the land records, so we draft it with that in mind.

When should you replace an older power of attorney?

Replace it if it was signed before October 1, 2010, if your agent has died or moved away, or if it doesn't address gifts, beneficiary changes, or digital assets. The current statutory form covers digital assets directly, which many older documents never mention. A new document that revokes the old one is usually cleaner than amending it, since banks can lose track of amendments.

A power of attorney only matters on the day someone needs to use it, and that's a bad day to find out it won't work. If yours is more than a few years old, or you aren't sure what it covers, Grant, Riffkin & Strauss, P.C. can review it alongside your will and advance directive. Contact our Rockville office to schedule a review while you can still sign a new one.