When you enter into a committed relationship with someone, sharing and disclosing financial information is often involved. Preparing for the future with your significant other should include discussions about finances. Joint accounts and power of attorney are often used between married couples, although either of these can be established with other individuals. Joint accounts are those held by two or more people. A power of attorney is a legal document that gives one person the right to make certain decisions -- usually legal or medical -- on behalf of another.
Joint Accounts
A joint account is one shared by two or more people. Each has equal control of the account. From a joint checking or savings account, for example, either account holder may at any time withdraw the funds regardless of which account holder deposited the money. Married couples often have joint bank accounts, but you can open a joint account with anyone you wish -- your child or another relative, a business partner or a friend.
Caution
Setting up a joint bank account requires a high level of trust. However, sometimes the other person might take advantage of that trust. It's important to monitor the bank account through your statements or online banking. Unfortunately, if you look at your account one day and see all the money is gone there's not much the bank can do. You will need to seek legal action in order to get your share of the money back.
Power of Attorney
A power of attorney is a legal document that appoints an attorney-in-fact to make decisions and conduct transactions on behalf of another person. Usually, one person is given power of attorney for another in the event that the latter will become incapacitated and unable to make decisions or pay bills. A person leaving the country for an extended period of time also might grant power of attorney to another person to handle business transactions or financial decisions on his behalf. There are a few different types of power of attorney, and the decisions the attorney-in-fact may and may not make vary by type. Power of attorney can be voided at almost any time..
Types
The general power of attorney grants the attorney-in-fact the ability to execute financial transactions, purchase or sell property, sign contracts, file tax returns and conduct other business related to your finances. You can use a special power of attorney to limit the types of financial decisions and transactions the attorney-in-fact is allowed to make. A health care power of attorney allows the attorney-in-fact to make decisions about your medical care if you cannot make them on your own. Durable power of attorney names a person to act on your behalf if you become mentally incapacitated. It can allow an existing power of attorney to remain in place under your mental state, or determine that a power of attorney will begin should this ever happen to you.