Power of attorney for banking and finances

There are many situations where you need to let another person handle your finances: a longer stay abroad, serious illness, a busy everyday life or planning for old age. In all these cases a power of attorney is the central tool.

This guide explains what a banking power of attorney is, what it can be used for, and what to remember when you issue or receive one.

Note: this guide is for information. Specific questions about your bank's requirements for powers of attorney should be settled directly with the bank. Contact a lawyer for more complex situations.

What is a power of attorney for banking and finances?

A power of attorney is a written declaration in which you (the grantor) give another person (the attorney) the right to act on your behalf within a specific area. A banking power of attorney gives the attorney the right to access your accounts, make transfers, pay bills and in certain cases enter into agreements on your behalf with the bank.

A banking power of attorney is not the same as sharing your MitID. Sharing your MitID is on the contrary against the rules for MitID. A power of attorney is a legally binding declaration, and it should be in writing.

When is a banking power of attorney used?

Stay abroad: if you are abroad for a period and need help handling your Danish finances.

Illness: short-term or long-term illness that makes it hard to handle your finances yourself. Note: for long-term illness or incapacity, a lasting power of attorney or a guardianship may be more suitable.

Busy periods: parents who want a child to be able to help with daily banking.

Business: a company that wants to give an employee access to the company account.

Estate of a deceased person: an heir who needs temporary access to the deceased's account to pay expenses before the estate is finally settled. Note that this requires the probate court's involvement, not a power of attorney from the deceased (see below).

What can the attorney do?

It depends on the scope of the power of attorney. A banking power of attorney can give the right to:

• Deposit and withdraw money
• Make transfers
• Pay bills and set up direct debit
• View account statements and transactions
• Enter into ordinary banking agreements (for example ordering a payment card)

Typically the bank requires a separate and possibly notary-confirmed power of attorney for:

• Taking out a loan or credit
• Buying and selling securities (unless this is expressly stated)
• Selling real property (which also requires registration)

What does your bank require?

Banks have their own requirements for powers of attorney. Typically required:

• That the content of the power of attorney appears clearly
• That the grantor is identified with a CPR number or passport
• That the attorney is likewise identified
• That at many banks the power of attorney is signed digitally with MitID

Contact your bank before you issue the power of attorney to make sure the formal requirements are met. Otherwise you risk the bank refusing it.

What should the banking power of attorney contain?

A good banking power of attorney contains:

1. The grantor's name and CPR number: clear identification
2. The attorney's name and CPR number: who holds the power of attorney?
3. The scope of the power of attorney: a precise description of what the attorney can do
4. Which bank and account type: does it apply to all accounts or a specific account?
5. Duration: is the power of attorney open-ended, or does it apply for a specific period?
6. Date and signature from the grantor

Example of a scope wording:

"The attorney has the right to make transfers, pay bills and access account statements on account number [XXXX-XXXXXXXX] at [Bank]. The attorney does not have the right to take out loans or credit or to dispose of securities."

Time-limited vs. open-ended power of attorney

Time-limited: recommended in most cases. The power of attorney applies only for the period you have stated and is easier to manage because it expires automatically.

Open-ended: applies until you actively revoke it. It requires you to proactively notify the bank that the power of attorney no longer applies.

Remember: a banking power of attorney as a rule lapses on the grantor's death. The bank will normally block the account, after which the rules of the estate apply.

Can the power of attorney be misused?

Yes, and it is a real risk. Only give a power of attorney to someone you fully trust. A banking power of attorney gives real authority, and misuse can have serious consequences.

To limit the risk you can:

• Limit the power of attorney in time
• Set amount limits (for example "may transfer up to DKK 5,000 per transaction")
• Limit the power of attorney to specific accounts
• Ask the bank to send you transaction notifications

Special situations

Power of attorney and the estate of a deceased person

On a death, the bank typically blocks the deceased's account. A power of attorney that the deceased gave while alive can as a rule not be used after death. Instead the rules of the estate apply.

The heirs can for a period get access to pay, for example, funeral costs and ongoing fixed expenses, typically on the basis of a probate certificate showing who is authorised to act on behalf of the estate.

Power of attorney for an elderly parent

Many adult children want to help ageing parents with their finances. A banking power of attorney is one option, but for an ongoing need a lasting power of attorney should be considered. It is a more permanent and legally robust tool, because it also covers the situation where the parent loses the ability to act themselves.

Power of attorney for a stay abroad

If you go abroad for a period, a clear, time-limited banking power of attorney is recommended, combined with your own digital access to online banking, so you can follow the transactions yourself.

Lasting power of attorney vs. banking power of attorney

The lasting power of attorney is a more comprehensive tool that can cover finances, property and personal matters, and that only takes effect when the grantor can no longer look after their own interests. A banking power of attorney is simpler and works immediately from signing.

Use a banking power of attorney for temporary and limited situations. Use a lasting power of attorney for long-term planning for old age or illness.

Revoking a banking power of attorney

You can revoke a banking power of attorney at any time. This is done by written notice to the bank, and most banks require either a visit to the branch or a signed declaration. Remember also to inform the attorney that the power of attorney has been revoked.

A clear and correct banking power of attorney with the right provisions on scope, duration and limitations protects both you and your attorney and makes it easy for the bank to accept the power of attorney.