Episode 26: Why Banks Reject Powers of Attorney for Trust Accounts
Episode 26
Host: Jill Mastroianni
Why Banks Reject Powers of Attorney for Trust Accounts
In this Tuesday Triage episode, Jill unpacks a common source of frustration for families: why a power of attorney works for some accounts but fails when it comes to trust assets. Using listener Lindsey’s real-life question, Jill explains the crucial distinction between acting as an agent under a power of attorney and serving as trustee. You’ll learn how banks view these documents, why powers of attorney don’t apply to trust accounts, and what you can do to avoid roadblocks when helping aging parents.
What Jill discussed:
Lindsey’s story: Why her father’s power of attorney worked at the bank for checking and savings accounts, but not for trust accounts.
The basics of a financial power of attorney: What authority it gives, and its limits.
Why banks sometimes hesitate: Knowledge gaps, fear of liability, and extra review layers.
Tips to smooth the process: Submitting powers of attorney before capacity is lost, and consolidating accounts at cooperative institutions.
The bigger picture: A power of attorney covers personal assets; trust assets follow the trust agreement.
Resources & Links:
Episode 17: How Powers of Attorney Work, When to Use Them, and When It’s Too Late to Get One
Episode 19: Why You Need (or Don’t Need) a Trust
Parent Prep Plan – Hands-on support to help your parents start (and finish) their estate planning
Connect with Jill:
Website: DeathReadiness.com
Email: jill@deathreadiness.com
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Jillian Mastroianni (0:00): Why does a power of attorney work at the bank for some accounts, but not for others?
That’s the question Lindsey from Tennessee ran into when she tried to help her dad.
She could use his power of attorney to access his checking and savings, but when she got to his trust accounts, the bank shut her down—and they wouldn’t explain why.
In today’s episode, we’ll unpack what’s really going on, the key distinction most people miss, and how you can avoid the same frustration.
Welcome to the Death Readiness Podcast. This is not your dad’s estate planning podcast. I’m Jill Mastroianni, former estate attorney, current realist, and your guide to wills, trusts, probate and the conversations no one wants to have. If your Google search history includes, “Do I need a trust?” “What exactly is probate?” and “Am I supposed to do something with mom’s Will?” you’re in the right place.
(00:59) Back when I was practicing law, I worked with a client who had been named as his father’s agent under a financial power of attorney. His father was elderly and no longer had the mental capacity to make decisions for himself.
On top of that, his father owned a small business and had been serving as its President. My client assumed he could simply step in and take over that role. But he couldn’t. And that was hard for him to understand.
Here’s why: as President, his father had been elected by the company to serve in that role.
The power of attorney gave my client the ability to manage his father’s personal finances, but it didn’t automatically transfer his father’s authority in roles that required election or appointment.
And the duties weren’t the same, either.
As agent, my client owed his father a fiduciary duty—meaning he had to act with care, loyalty, and good faith on his father’s behalf.
But his father, in his role as President, owed a fiduciary duty to the company and its stakeholders.
Those are two very different obligations.
(02:04) Back then, I wrote a long legal memo full of citations to explain it all. But that’s not what I do anymore. Today, I’m going to break it down in a way that actually makes sense—without the footnotes.
If this story makes you wonder whether your own parents’ planning is really in order, that’s exactly why I created the Parent Prep Plan.
It’s for adult children who know their parents need to get their estate plan done but just can’t get them to start.
In the Parent Prep Plan, I help find a state-specific attorney who’s the right fit, and then I walk with your parents through the process—organizing assets, prepping for and even attending attorney meetings, and following up afterward to explain things in plain English.
I also keep the plan moving forward when life gets busy, so you don’t have to be the one chasing documents or trying to translate legal jargon at the dinner table.
You’ll find the link in the show notes and at deathreadiness.com/parentprepplan.
(03:04) Now back to the question about powers of attorney from Lindsey in Tennessee.
Lindsey is serving as the agent under her father’s financial power of attorney.
A financial power of attorney is a document that lets someone else step in and handle your financial matters—things like banking, paying bills, or managing investments.
If you caught the first Tuesday Triage episode a few weeks ago, you might remember that we took a deep dive into powers of attorney and when to use them. If you missed it, I’ll include a link in the show notes that episode: How Powers of Attorney Work, When to Use Them, and When It’s Too Late to Get One.
So here’s what happened: Lindsey went to the bank and was able to get herself added to her dad’s checking and savings accounts as his agent under the power of attorney.
But when she tried to do the same with his trust accounts, the bank said no.
What frustrated her most—and why she wrote in—is that the bank not only refused to add her, they wouldn’t explain why.
(04:05) If you’ve ever tried to use a financial power of attorney at a bank, you probably know it’s not always smooth sailing.
Different institutions handle them differently, and the amount of extra paperwork—or extra hoops—you’ll face can vary widely.
Why is that? In my experience, the biggest issue is a knowledge gap.
Many bank employees simply haven’t had much training on how powers of attorney work.
And they know that one wrong move—letting the wrong person access an account—could wipe out someone’s life savings.
So, if a document looks complicated, or the person you’re talking to hasn’t seen many of these before, you may run into delays while it gets bumped up the chain for a supervisor’s review.
One tip here, if you can, is to try submitting the power of attorney to the bank for review before your parent loses capacity.
That way, you’ll know in advance if they have questions or need extra documentation.
And if you know a certain local bank is easier to work with, sometimes it makes sense to consolidate accounts there.
(05:10) That said, I don’t think Lindsey’s issue was really about the wording of her dad’s power of attorney, or whether it was valid.
And Lindsey’s frustration? We’ve all been there. Maybe not with banks, but with customer service in general. (Don’t get me—or my daughter—started on our last trip to Target.) That feeling of hitting a wall when you’re just trying to check something off your list can be exhausting.
And I could feel that in Lindsey’s email—the stress, the desperation of trying to do the right thing and move things forward. I’m grateful she reached out, because these situations are not only common, they’re really tough to navigate alone.
My guess in this situation is that the bank wasn’t trying to be difficult, but they also aren’t in the business of providing legal advice or legal education.
Lindsey is her dad’s financial agent, which means she can step into his personal financial shoes—pay bills, manage accounts, sign checks.
But she cannot automatically step into roles where he had obligations to others.
(06:15) Let me give you a few examples.
If Lindsey’s dad was the chairperson of his homeowners’ association, could Lindsey just step in as chairperson because she’s the agent under his power of attorney? No. The HOA would follow its bylaws to appoint a new chairperson if her dad could no longer act.
Or say he was treasurer of the local animal rescue group. Could Lindsey automatically take over that role? Again, no. The group would look to its own procedures to fill the treasurer’s seat.
Think of it like an elected official. If the President of the United States can’t serve, we don’t look to whomever he named in his power of attorney. We look to the United States Constitution—specifically the 25th Amendment—which says the Vice President takes over.
Now, I know what you might be thinking: Okay, but Lindsey isn’t trying to be a chairperson, or a treasurer, or the President of the United States.
True. But these examples are clearer cut, and they set the stage for why her situation with the trust accounts is more complicated.
(07:19) Let’s assume her dad’s trust accounts are part of his revocable trust. A revocable trust is often created to avoid probate and make it easier to manage assets during someone’s lifetime.
And if you’d like to learn more about revocable trusts, I’ll link in the show notes to my episode: Why You Need (or Don’t Need) a Trust
So, what do all these roles have in common—chairperson, treasurer, even President? In each case, Lindsey’s dad was elected or appointed based on a governing document. And with that appointment came fiduciary duties—obligations to others. And that’s the key difference.
By naming Lindsey as his agent under a power of attorney, her dad gave her authority over assets titled in his individual name—things that belong to him personally.
(08:13) But a trust is different. In a revocable trust, her dad wasn’t just the creator of the trust—he was also serving as trustee. That means the assets inside the trust weren’t titled to him as an individual anymore. They were titled to him in his capacity as trustee.
And here’s the key point: only the trustee can manage trust assets.
So while Lindsey’s power of attorney lets her step into her dad’s personal financial shoes, it doesn’t automatically let her step into his trustee shoes.
Think back to that Constitution example. When the President can’t serve, we don’t look to a power of attorney—we look to the 25th Amendment to see who steps in. In the same way, when a trustee can’t serve, we don’t look to a power of attorney. We look to the trust agreement itself, which spells out who becomes the next trustee, or how one is appointed.
That’s why Lindsey couldn’t use her dad’s power of attorney to act on his trust accounts. The bank wasn’t being arbitrary—they were following the governing document of the trust.
(09:26) So what does this mean for you? A power of attorney is helpful, but it only covers assets in someone’s individual name. If your parent has a revocable trust, the trust itself will name who takes over as trustee when they can’t serve anymore. That’s where you need to look—not to the power of attorney—to see who has authority. Knowing that distinction ahead of time can save you a lot of frustration and confusion at the bank.
Lindsey, thank you for asking this question—it gave me a chance to talk through an issue that trips up so many families
If you’re listening and realizing you don’t know who your parents named as successor trustee—or whether they even have a plan—my Parent Prep Plan can help. I’ll walk with your parents through the process, work alongside the attorney, and keep things moving so you don’t have to. You’ll find the details linked in the show notes and at deathreadiness.com/parentprepplan.
And, if you found this episode helpful, I’d love for you to share it with someone you think could benefit from it.
(10:34) In the next episode, probate court Judge Andra Hedrick and I dig into the rise of DIY wills—handwritten notes, internet forms, those quick fixes people think will save time and money—and what really happens when those wills land in probate court.
This is Death Readiness, real, messy and yours to own. I’m Jill Mastroianni and I’m here to help you sort through it, especially when you don’t know where to start.
Hi, I'm April, Jill's daughter. Thanks for listening to The Death Readiness Podcast. While my mom is an attorney, she’s not your attorney. The Death Readiness Podcast is for educational and entertainment purposes only. It does not provide legal advice. For legal guidance tailored to your unique situation, consult with a licensed attorney in your state. To learn more about the services my mom offers, visit DeathReadiness.com.
