Making your partner or close relative an authorized signer on your checking account is a way to give that person access to it without giving them joint ownership of its assets. Older people often choose to have trusted relatives added as authorized signers to help them manage finances in case of illness or disability.
The authorized signer on a checking account has access to the funds within the account, even if they are not the owner of the account.
Authorized Signer Definition
Typically, authorized signers can sign checks and withdraw or deposit funds without having to ask the owner for permission. However, any transactions made by the signer must be for you as the owner of the account. Authorized signers -- including spouses -- have no rights to the account's assets if you die unless they are listed as the account's beneficiary.
Authorized Signer Obligations
While an authorized signer should not write checks on the account if she knows funds are unavailable, she is not responsible for any fees resulting from overdrafts. The only exception is if you have a contract with the signer where she agrees to be liable for any charges. If the authorized signer uses funds from the account for anything that isn't for your benefit, you might have a case for a personal lawsuit. You may have to take that person to court to recoup your money. However, you're still responsible for any fees or charges brought on by the authorized signer. One caveat: Do not expect the bank to monitor the purpose for which the authorized signer is writing checks or withdrawing funds.
Rights and Responsibilities
Typically, an authorized signer has many of the same rights to the account as the account owner. Not only can he sign checks from the account, he can access the account's balance and view transactions. The Uniform Commercial Code also grants him the right to close the account or stop payments on checks. The only way to stop that is for you both to put it in writing that only you can make that call.
Adding and Revoking Signers
If you want to add a signer to your account, you'll need to take that person to your bank to fill out the application and sign any contracts. You'll both need picture identification and Social Security cards. If your financial institution is an Internet-based bank, follow its procedure to add an authorized signer. The procedures to revoke a signer’s rights vary by the institution, but in most cases you'll have to notify the bank in writing. It's up to you to get any checks or debit cards out of the account. You're also responsible for any charges until the bank makes the changes, which may take up to 24 hours.
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- Rights of Survivorship on Bank Accounts
- Banking Regulations for Power of Attorney & Joint Accounts
- How to Close a Bank Account After Someone Dies
- Does One Spouse's Bad Credit Affect a Joint Bank Account?
- What Happens to Bank Accounts When Someone Dies?
- Terminating a Bank Account
- How to Take a Wife's Name Off a Joint Checking Account