Banking Regulations for Power of Attorney & Joint Accounts

Before opening a joint bank account or giving someone power of attorney, you need to fully understand the repercussion of those actions. Joint bank accounts allow two or more parties to share control of the funds in the account. A power of attorney grants another person the authority to act in your place. As a result, it's crucial that you make these financial arrangements only with people whom you trust completely.

While placing this much trust in others may seem risky, both joint accounts and power of attorney arrangements can make your life easier. Power of attorney, for example, allows someone to act on your behalf if you become seriously ill or otherwise unable to handle your own affairs. Designating someone to do so before you need them is much faster than waiting for the court to appoint a trustee after the fact.

Each account holder can access a joint account to withdraw or deposit money without getting permission from the other joint holder. A joint account holder can even take out all of the funds, close the account and open a new individual account in his name, so make sure you trust all of the account holders before depositing any money into the account. All account holders are equally liable for bank fees charged due to insufficient funds. If one holder dies, the surviving holders split ownership of the account. You can remove a deceased owner from the account by showing the death certificate to the bank and completing the appropriate paperwork.

If you designate an agent with a power of attorney, the agent can act in your place in a transaction. The agent has the same authority as you would and can act independently without getting your prior approval. Check your state laws before signing the document. In some instances a power of attorney is not valid until you have it notarized. Take the power of attorney to the bank when opening or closing an account or adding the agent to the list of authorized signatures. You can revoke the power of attorney at any time without giving a reason. The revocation should be in writing and kept with the original power of attorney.

You can issue a general or specific power of attorney, depending on your needs. Draft the document carefully so you do not grant more authority than intended. A general power of attorney gives the agent the right to close bank accounts on your behalf unless otherwise specified. Limited scope power of attorneys may still grant the authority to open and close bank accounts if it is an implied part of performing the required duties. For example, a power of attorney that grants an agent the authority to handle your finances will usually also grant the ability to make changes to your bank accounts.

If your power of attorney agent opens a new bank account for you, he should open the account in your name and list himself as having power of attorney. Ask the bank how the agent should sign checks on your behalf. He may have to sign your name and add the "POA" notation on the check. Other banks may let your agent sign his own name as long as he appears on the signature card.