What is the Right Way to Add a Trusted Person to Your Bank Account?
June 7, 2019
“Should I add a family member or trusted friend to my bank account?” Providing someone with the authority to access your account means they could manage your financial affairs if you were to be hospitalized or become incapacitated. However, it’s important to know the potential consequences of adding that trusted person to your account.
The Problem: Joint Bank Accounts
When you add a joint owner to your bank account you are giving that person full ownership and access to your funds. As a joint owner this individual may access the account at any time and is not required to let you know they have done so. The joint owner could use the money for her or his own purposes opening you up for possible financial exploitation. Law enforcement rarely pursues allegations of theft because, as the original owner, you have given the joint owner the right to take the money out of the account.
Also, joint accounts are subject to the liabilities of all owners. For example, if the person you add to your account is sued, files bankruptcy or divorces, the money in the account could be seized to address those liabilities.
The Solution: Power of Attorney
Under a Power of Attorney (POA), your agent must act in your best interest and cannot spend the money for their needs. An agent has a fiduciary duty to only use your funds for your benefit. Should the agent violate that duty and their actions result in financial abuse, law enforcement has the power to take action against the agent.