Readers Write: ‘It’s the banks, stupid!’


It’s the banks, stupid!
The law generally provides that two executors or two trustees who are serving must act unanimously, and that three or more of such fiduciaries who are serving must act by a majority, unless the applicable will or trust agreement specifically provides otherwise.  (In New York, see New York’s EPTL §10-10.7.)
Business corporations and organizations, as a matter of good internal financial control, also frequently require two signatures on checks and on similar instruments. There are sound reasons for these rules, namely to protect estates and trusts, as well as business organizations from unauthorized or fraudulent acts.  
Despite the above, many banks will not open an account for an estate, trust, or business organization unless there is only a single signor.  Aside from thwarting good financial internal controls, irrevocable trusts not containing such authority may not be readily amended, and a court proceeding may be required for two or more executors of an estate or trustees of a testamentary trust to be able to act alone.
Banks should be required to follow the law applicable to estates and trusts. At the least, the law should be amended to allow executors and trustees, acting unanimously, to authorize one or more of them to sign checks and similar instruments singly.   
There is also a problem with powers of attorney, particularly in New York.  
Although the New York legislature created a statutory power of attorney form in New York’s General Obligations Law, Article 5, Title 15, banks and other financial institutions often have their own rules as to whether or not a particular statutory power of attorney will be respected.
For example, some financial institutions will not accept a power of attorney which is more than three years old. Others set the limit at ten years.  
Frequently, a perfectly executed statutory power of attorney will not be usable unless the agent appears in person at the bank to sign a signature card.  
This may create a problem with geographically separated families, where a child who is named as agent has moved from New York and lives in another state.
Presently, the only recourse to a financial institution’s refusal to accept a power of attorney, is to bring an expensive and time-consuming court proceeding to require the financial institution to honor the power of attorney.  
It is recommended that the law be amended to require recognition of a statutory power of attorney which is not more than a specified number of years old, say five years, and to allow a financial institution, in its reasonable discretion, to accept a power of attorney which is older, with provisions for exoneration of the financial institution in the latter case.  
Finally, it is recommended that a financial penalty be imposed upon a bank or other financial institution that unreasonably refuses to recognize a properly executed statutory power of attorney.
At the least, a court should have authority to require the financial institution to reimburse a successful plaintiff for his or her legal fees.
Howard M. Esterces


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