Q: I have power of attorney for my parents. How do I add it to their bank accounts? Would it be better to be added on the account rather than using the power of attorney?
A: As you know, a power of attorney (POA) allows another person, the Attorney-in-Fact (AIF), to conduct business on behalf of the principal. The POA authorizes the AIF to sign for and on behalf of the principal.
In the circumstances that you describe, the POA should allow you to access your parents’ bank accounts and make deposits and write checks on their behalf. The POA doesn’t create any ownership interest in the bank accounts. Rather, it only allows access and signature authority.
If your parents “add you” to the account, you become a joint owner of the account. As a joint owner, you would be granted all the authority that an owner of the account holds. Like the POA, you would be allowed to access the accounts and make deposits and withdrawals.
The down side, depending on your perspective, is that by adding you to the account, you acquire all the incidents of ownership. You wouldn’t be serving as a fiduciary like you would under the POA. Being an owner allows you to treat the money like it is your own.
Another significant difference involves the death of a joint owner. When a joint owner dies, the surviving owners own the account. A POA does not create an ownership interest in the account so when an owner dies, it would pass to the surviving joint owners, POD beneficiaries or under the decedent’s estate plan, depending on the circumstances. The fact that you are the AIF does not mean you will receive the proceeds after death.
Personally, I prefer utilizing a POA rather than adding a joint owner to an account. There are always exceptions, but as a general rule, I don’t like creating the ownership interest. If it’s the intent of the owners that you receive the proceeds of the bank account, they can name you POD beneficiary on the account and allow you access to the account utilizing the POA.
Finally, if you want to access the bank accounts utilizing the POA, I recommend that you contact the bank and provide them with a copy of the POA. The bank will likely scan the POA into their system and add you as a signatory on the account. That’s usually all it takes.
Christopher W. Yugo is an attorney in Crown Point. Chris’ Estate Planning Article appears online every Sunday at www.nwi.com. Address questions to Chris in care of The Times, 601 W. 45th Ave., Munster, IN 46321 or to Chrisyugolaw@gmail.com. Chris’ information is meant to be general in nature. Specific legal, tax, or insurance questions should be referred to your attorney, accountant, or estate-planning specialist.