We have a deposit account managed by our trust department that lists our bank as agent under a power of attorney. Can a bank with trust powers serve under a power of attorney for the account? If so, how should the account be titled?

Yes, a bank may serve as an agent for a deposit account under a power of attorney for property — provided that the power of attorney (POA) document includes the power to execute financial institution transactions.

We note that in a 1991 Interpretive Letter, the Office of the Commissioner of Savings and Residential Finance (now the Illinois Department of Financial and Professional Regulation, or IDFPR) opined that a state bank must have trust powers under the Corporate Fiduciary Act if the bank is serving as an agent under a POA. The letter further opined that if a bank does not have trust powers, then a bank officer may serve as an agent in his or her individual capacity. In our view, given that the Illinois Power of Attorney Act clearly permits any entity or individual to serve as an agent under a POA, we believe that a bank without trust powers may serve as an agent (as do many other nonbanking entities in Illinois). Under the Interpretive Letter, however, this issue is an open question. But in this case, because your bank does have trust powers, it clearly has authority to serve as an agent under a POA.

When titling the account, we recommend titling it as you would any other account with a POA. For example, titling the account with the accountholder’s name, followed by “Your Bank Name POA,” should be sufficient in light of the titling requirements for fiduciary accounts under the FDIC’s deposit insurance regulations.

For resources related to our guidance, please see:

Illinois Power of Attorney Act, 755 ILCS 45/2-3(b) (“‘Agent’ means the attorney-in-fact or other person designated to act for the principal in the agency.”)

Illinois Power of Attorney Act, 755 ILCS 45/2-3(d) (“‘Person’ means an individual, corporation, trust, partnership or other entity, as appropriate to the agency.”)

Illinois Power of Attorney Act, 755 ILCS 45/3-4(b) (“Financial institution transactions. The agent is authorized to: open, close, continue and control all accounts and deposits in any type of financial institution . . . and, in general, exercise all powers with respect to financial institution transactions which the principal could if present and under no disability.”)

IDFPR Interpretive Letter 91-35 (December 23, 1991) (Discussing the authority of a state bank to serve as agent under a power of attorney encompassing property and financial matters.)

FDIC Deposit Insurance Coverage Regulations, 12 CFR 330.5(b) (“The FDIC will recognize a claim for insurance coverage based on a fiduciary relationship only if the relationship is expressly disclosed, by way of specific references, in the ‘deposit account records’ (as defined in § 330.1(e)) of the insured depository institution. Such relationships include, but are not limited to, relationships involving a trustee, agent, nominee, guardian, executor or custodian pursuant to which funds are deposited. . . .”)