Why Banks Reject Powers of Attorney for Trust Accounts

Have you ever been surprised when a bank accepts a power of attorney for one account but rejects it for another? That’s exactly what happened to Lindsey from Tennessee. She could use her dad’s power of attorney for his checking and savings accounts, but when she tried to use it to access his trust accounts, the bank said no — and didn’t explain why. 

The Limits of a Power of Attorney. A financial power of attorney gives someone the authority to step into another person’s personal financial shoes to do things like pay bills, manage accounts, and sign checks. But that authority only extends to assets held in the person’s individual name.

Authority under a power of attorney for an individual doesn’t translate into authority for that same individual serving as trustee. Only the trustee has authority to access and manage the trust’s assets. That’s why Lindsey’s power of attorney was insufficient to access trust accounts. Just as the Constitution tells us who takes over when a president can’t serve, the trust agreement tells us who steps in as trustee when the current trustee can no longer serve.

What You Can Do Now. If your parents have a revocable trust, make sure you know who they named as successor trustee. And if you’re not sure what their plan looks like, or whether they even have one, now is the time to ask.

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