A person with Power of Attorney for their parents can’t actually “add” the POA to their bank accounts. However, they may change bank accounts to be jointly owned. There are some pros and cons of doing this, as discussed in the article “POAs vs. joint ownership” from NWI.com.
The power of attorney permits the agent to access their parent’s bank accounts, make deposits and write checks. However, it doesn’t create any ownership interest in the bank accounts. It allows access and signing authority.
If the person’s parent wants to add them to the account, they become a joint owner of the account. When this happens, the person has the same authority as the parent, accessing the account and making deposits and withdrawals.
However, there are downsides. Once the person is added to the account as a joint owner, their relationship changes. As a POA, they are a fiduciary, which means they have a legally enforceable responsibility to put their parent’s benefits above their own.
As an owner, they can treat the accounts as if they were their own and there’s no requirement to be held to a higher standard of financial care.
Because the power of attorney does not create an ownership interest in the account, when the owner dies, the account passes to the surviving joint owners, Payable on Death (POD) beneficiaries or beneficiaries under the parent’s estate plan.
If the account is owned jointly, when one of the joint owners dies, the other person becomes the sole owner.
Another issue to consider is that becoming a joint owner means the account could be vulnerable to creditors for all owners. If the adult child has any debt issues, the parent’s account could be attached by creditors, before or after their passing.
Most estate planning attorneys recommend the use of a power of attorney rather than adding an owner to a joint account. If the intent of the owners is to give the child the proceeds of the bank account, they can name the child a POD on the account for when they pass and use a power of attorney, so the child can access the account while they are living.
One last point: while the parent is still living, the child should contact the bank and provide them with a copy of the POA. This, allows the bank to enter the power of attorney into the system and add the child as a signatory on the account. If there are any issues, they are best resolved before while the parent is still living.
By: Edward J. Welch, Esq. ||| Estate Planning | Wills | Trusts | Asset Protection
If you would like to discussyour legacy options with an estate planning attorney in Jupiter or Palm Beach Gardens, Florida, schedule a complimentary call with Edward J. Welch atWelch Law, PLLC. At Welch Law, WE WANT TO DRAFT YOUR LEGACY!
Reference: NWI.com (Aug. 15, 2021) “POAs vs. joint ownership”
FAQs
A joint account holder does not need a power of attorney to get information from your bank, access the funds in the account, or make deposits or withdrawals on your behalf.
Does a joint account override a will? ›
Yes, joint ownership of an account overrides a Will. The joint ownership will be effective over and supersede any directions in your Last Will and Testament regarding a specific account and how those assets are divided.
Why would the bank deny the power of attorney? ›
A few exceptions do exist. For example, if the bank believes in good faith that your agent doesn't have the authority to perform the act requested, or if the bank is aware of a report that your agent might be exploiting or abusing you, the bank doesn't have to accept the document.
What does the POA mean on a bank account? ›
A financial power of attorney is a legal document that authorizes an agent to act on your behalf in financial matters. Financial POAs function as proof that the designated agent has the power to manage the principal's finances.
Can a POA be added to a checking account? ›
If you want to add someone as attorney-in-fact to your bank account, it is important that you designate it properly. The attorney-in-fact should be designated on the account as "POA". This designation makes it clear that the person is acting on the account as a fiduciary, not as a joint owner.
Who owns rights to a joint account if one dies? ›
Joint Bank Account Rules on Death
"The joint owner becomes the legal and equitable owner of all funds in a joint account at the instant of death," says Doehring. "It does not become part of the probate estate."
What happens when someone dies and you have a joint account? ›
Joint bank accounts
Couples may also have joint bank or building society accounts. If one dies, all the money will go to the surviving partner without the need for probate or letters of administration. The bank may need the see the death certificate in order to transfer the money to the other joint owner.
Can a power of attorney freeze a bank account? ›
Yes, a power of attorney general has the authority to close a bank account on behalf of the principal. However, the specific powers granted to the agent and the requirements of the bank may vary.
Why won't Wells Fargo accept my power of attorney? ›
Why won't Wells Fargo accept power of attorney? To protect themselves from liability, banks, especially large banks such as Wells Fargo, have been known to reject powers of attorney, for fear of being parties to fraud.
How to write a power of attorney letter for a bank? ›
Power of attorney documents must include the name and contact information of the person granting the power of attorney (the “principal”), the name and contact information of the person being granted the power of attorney (the “agent”), the date the document was signed, and a detailed description of the powers being ...
Each person on the account has the legal authority to use the entire account balance for any reason. In contrast, a person holding a power of attorney also has access to the grantor's bank account, but he or she is legally required to use those funds for the benefit of the grantor.
What are the disadvantages of power of attorney? ›
The POA cannot transfer the responsibility to another Agent at any time. The POA cannot make any legal or financial decisions after the death of the Principal, at which point the Executor of the Estate would take over. The POA cannot distribute inheritances or transfer assets after the death of the Principal.
What three decisions cannot be made by a legal power of attorney? ›
What three decisions cannot be made by a legal power of attorney? A power of attorney cannot change or invalidate a will, act outside of the principal's best interest, or violate the terms of nominating documents, and cannot make decisions on behalf of the principal after their death.
Can a POA open a joint bank account? ›
A person with Power of Attorney for their parents can't actually “add” the POA to their bank accounts. However, they may change bank accounts to be jointly owned. There are some pros and cons of doing this, as discussed in the article “POAs vs. joint ownership” from NWI.com.
Can a spouse withdraw money without permission? ›
When a married couple opens a joint account together, they both have equal access to funds without each other's consent. Regular bank accounts, on the other hand, are owned by one person who has complete control over the account. Only the account holder can authorize transactions to and from that account.
How to get access to an elderly parents bank account? ›
According to the IRS, adult children can use the signature authority to access an elderly parent's bank account. You can use this method to pay bills and other financial requirements for your aging parents. Your local bank can help you access the bank account with your and your parent's signatures.
Does a joint bank account become part of an estate? ›
It depends on the account agreement and state law. Broadly speaking, if the account has what is termed the “right of survivorship,” all the funds pass directly to the surviving owner. If not, the share of the account belonging to the deceased owner is distributed through his or her estate.
How does inheritance work with a joint account? ›
When set up correctly, a joint bank account can ensure seamless access for your loved one after you pass away. Because, in most cases, joint bank accounts are not subject to the long, expensive probate process. When one member of a joint bank account dies, ownership automatically passes to the surviving member(s).
Are joint accounts part of a deceased estate? ›
Money in joint accounts
Normally this means that the surviving joint owner automatically owns the money. The money does not form part of the deceased person's estate for administration and therefore does not need to be dealt with by the executor or administrator.
Does the executor have access to a joint bank account? ›
Executors and administrators of a decedent's estate can only access their bank accounts if the decedent had not designated a beneficiary for the account. The documents an executor/administrator generally will be required to present to the bank include: A valid government-issued ID.
