IBA Compliance Connection

Your go to source for compliance!

A customer is an agent with a power of attorney (POA) for her mother and disabled sister, and would like to limit their access to their accounts. Can the customer rely on the POA to restrict their access to their funds, such as by closing the mother and sister’s accounts and establishing new accounts in the customer’s name? Or should she be appointed as their guardian first?

—

by

admin

No, we do not believe an agent with power of attorney may restrict a principal’s access to their accounts.

The Illinois Statutory Short Form Power of Attorney for Property permits an agent acting under power of attorney to “open, close, continue and control all accounts and deposits in any type of financial institution.” However, the principal always has the authority to revoke the power of attorney at any time if she wishes to resume control of her financial accounts. Thus, we do not recommend relying on a power of attorney document to permit your customer to restrict her mother and sister’s access to their accounts.

Additionally, we do not believe that the Power of Attorney Act is intended to serve as a substitute for guardianships. The statutory short form permits a principal to identify a preferred guardian of their estate “if a court decides that one should be appointed.” But a court cannot appoint a guardian absent a clear and convincing demonstration that an individual’s disability prevents her from managing her estate or financial affairs.

For resources related to our guidance, please see:

  • 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 (which term includes, without limitation, banks, trust companies, savings and building and loan associations, credit unions and brokerage firms); deposit in and withdraw from and write checks on any financial institution account or deposit; and, in general, exercise all powers with respect to financial institution transactions which the principal could if present and under no disability. . . .”)
  • Illinois Power of Attorney Act, 755 ILCS 45/3-3 (The statutory short form power of attorney for property states that “this power of attorney may be amended or revoked by you at any time and in any manner.”) 
  • Illinois Power of Attorney Act, 755 ILCS 45/3-3(d)(9) (“If a guardian of my estate (my property) is to be appointed, I nominate the agent acting under this power of attorney as such guardian, to serve without bond or security.”)
  • Illinois Probate Act, 755 ILCS 5/11a-3 (“If the court adjudges a person to be a person with a disability, the court may appoint (1) a guardian of his person, if it has been demonstrated by clear and convincing evidence that because of his disability he lacks sufficient understanding or capacity to make or communicate responsible decisions concerning the care of his person, or (2) a guardian of his estate, if it has been demonstrated by clear and convincing evidence that because of his disability he is unable to manage his estate or financial affairs, or (3) a guardian of his person and of his estate.”)