The Illinois General Assembly passed a bill is designed to reduce the incidence of third‐party institutions (banks, financial service providers, other entities) refusing to recognize valid powers of attorney (POAs) simply because of procedural or form‐based technicalities, thereby improving the reliability and predictability of estate-planning and agency relationships.

Senate Bill 3421 passed during the 2023-24 session, and it was signed into law on August 9, 2024. The legislation amends the Illinois Power of Attorney Act (IPAA) — specifically Section 2-8 (755 ILCS 45/2-8) — to clarify the rules governing when a third party may refuse to honor a statutory short-form power of attorney for property.

Key Provisions

Here are the most important points of SB 3421:

1. Clarification of “unreasonable refusal”
   The law provides that it is unreasonable for a third party to refuse to honor a properly‐executed Illinois statutory short‐form POA for property if the only reason is one of the following:
   • The POA is not on a form the third party prescribes.
   • There has been a lapse of time since the execution of the POA (i.e., a delay) without other facts.
   • On the face of the short‐form POA, there is a lapse of time between the date of acknowledgment of the principal’s signature and the date the agent seeks to act.
   • The document provided does not bear an original signature, witness, or notarization, but is accompanied by a properly executed “Agent’s Certification and Acceptance of Authority,” “Successor Agent’s Certification and Acceptance,” or “Co-Agent’s Certification and Acceptance” bearing the agent’s original signature.
   • The document appoints an entity as the agent (rather than a person) alone.

In short: those five items will not by themselves constitute a reasonable basis for refusal of a valid POA under Illinois law.

1. Reasonable causes for refusal
   The amendment also explicitly lists reasonable causes for a third party to refuse to honor a power of attorney for property. While SB 3421 does not list every cause in the summary version, examples include:
   • Actual knowledge or a reasonable basis to believe the agent is engaged in fraud or abuse of the principal.
   • The named attorney-in-fact’s authority has been altered or terminated.
   • The POA presented is not properly executed (e.g., lacks required formalities not covered by the “short-form” safe harbor).
2. Transition and effective date
   The bill took effect January 1^st of this year. It covers statutory short‐form POAs executed in accordance with the law at the time of execution. The safe-harbor “unreasonable refusal” standard applies to third parties receiving such POAs.

Why This Matters For Law Firms & Clients

For estate-planning attorneys, guardianship practitioners, financial institutions, accountants, and clients preparing POAs, SB 3421 offers several important implications:

• Increased enforceability of short-form POAs: Clients often want simplicity and predictability. Because the statutory short-form POA under Illinois law now benefits from clearer default protections, advisors can more confidently advise clients to use the statutory form, knowing that, absent other flagged concerns, third-party refusal based on time lapse or form‐type alone will likely be “unreasonable”.
• Reduced risk of push-back by financial institutions: Historically, banks and other fiduciaries sometimes refused to accept POAs if the institution required a proprietary form, or if the POA was somewhat old, or lacked certain formalities. Under SB 3421, such reasons alone will likely not justify refusal — which is a significant change.
• Risk management for third parties: Financial institutions and other service providers must update their internal policies and training to avoid refusing POAs for the disallowed reasons. They must also document and reason their refusals if they do refuse — relying on one of the enumerated “reasonable” causes. Otherwise, they could expose themselves to liability (or at least client complaint) for refusing a valid POA.
• Due-diligence and agent certifications remain important: While SB 3421 provides protections for certain common technical issues, it does not permit blind reliance. The third party may still request the Agent’s Certification and Acceptance of Authority, Successor Agent’s Certification, or Co-Agent’s Certification, or other documentation.
• Legacy POAs: For POAs already in use, attorneys should review whether those POAs comply with the requirements (particularly if executed “in accordance with the laws in effect at the time”). If so, clients may now assert stronger rights of reliance under the new statute that began on January 1, 2025.

Considerations & Limitations

• The safe-harbor applies to the Illinois statutory short‐form POA for property. It does not automatically apply to every possible POA or to every third‐party context (e.g., non-statutory forms, out-of-state POAs).
• Even under SB 3421, third parties retain the right not to honor a POA if they have a reasonable cause under one of the enumerated grounds (fraud, termination of principal’s capacity, etc.).
• The statute’s interplay with other legal doctrines (e.g., durable vs. non-durable POAs, advance directives, agents acting outside scope) remains — the POA must still be valid, and the agent must act within authority.
• Implementation by third parties may lag: institutions may update their forms, internal policies, training, and refusal checklists only gradually — so practitioners should anticipate some institutional inertia.
• Because the statute only became effective January 1, 2025, there may be a period of adjustment and case law may take time to develop in interpreting “reasonable cause” and the new “unreasonable refusal” standard.

Conclusion

SB 3421 is a meaningful refinement of Illinois POA law. For clients, it strengthens the enforceability of statutory short-form powers of attorney and reduces the risk of third‐party refusal based solely on form or age. For financial institutions and other third parties, it clarifies that certain common objections will no longer justify refusal — and therefore calls for internal policy adjustments.

If you have problems with an institution honoring a POA, call the Law Office of Jonathan W. Cole and we can assist you in moving your situation forward. Call us at (708) 529-7794 or email jonathan@jwcolelaw.com.