New Law Helps N.C. Credit Unions Handle Power of Attorney

GREENSBORO, N.C. – North Carolina credit unions faced with powers of attorney should find the job a little easier since a new law took effect October 1. More and more of the state’s financial institutions, uncertain about the validity of power of attorney documents they were presented, had shied away from accepting them. Now credit unions and others are allowed to accept such forms unless they have actual knowledge the written document is invalid or the attorney-in-fact is not authorized to conduct the particular transaction. The power of attorney issue may sound of more interest to lawyers than financial institutions. But Kim Bohannon, head of compliance issues for the North Carolina Credit Union League, says it arises frequently. “Here in the compliance department, accepting power of attorney is one of the common questions we receive,” Bohannon says. “Each form is a little different. There isn’t any specific wording. Theoretically you could write your own power of attorney and sign it without an actual attorney present to review the documentation,” she says. She cites the example of a member who was in a nursing home. She was mentally competent, but physically unable to come to the credit union. She had appointed someone at the nursing home as her attorney-in-fact. Then the employee left the nursing home. The nursing home wanted to fill that attorney-in-fact role. For its part, the credit union wanted to assist the member but at the same time protect her interests. Bohannon suggested the credit union consider going to the nursing home to visit the member and clarify the situation. In North Carolina, which boasts a number of military bases, power of attorney comes into play when a member of the military is shipped overseas and the remaining family needs to handle certain transactions. Bohannon explains the new law was actually initiated by a group of attorneys. However, the league supported the idea and one of the attorneys involved spoke to a group of credit unions and sought feedback. “The change basically sets out some standards for accepting a power of attorney and requires financial institutions to do a little more due diligence before refusing a power of attorney,” Bohannon says. A credit union or other party can still refuse to accept a power of attorney. However, the new law provides an affidavit for the attorney-in-fact to sign affirming that they are indeed the attorney-in-fact and there is nothing to invalidate the power of attorney, for example it has not been revoked. “That absolutely gives a credit union more confidence,” Bohannon says. “After all, you take on a certain amount of liability when you allow someone else to do a transaction for one of your members.” -