A power of attorney (POA) is a legal document that allows you to appoint someone to act on your behalf in the event that you are unable to do so. This can happen for a variety of reasons, such as a medical emergency or mental incapacity. A POA gives your designated agent (often called an attorney-in-fact) the power to make decisions and take actions on your behalf, such as signing legal documents or managing your finances.
One common misconception is that simply adding a child’s name to your bank account will provide them with the authority to manage your finances if you become incapacitated. While adding a child as a joint account holder can provide them with access to the account, it does not necessarily give them the legal authority to make financial decisions on your behalf.
Additionally, adding a child as a joint account holder can have unintended consequences. For example, if your child goes through a divorce, the account could be considered one of their assets subject to division. Similarly, if your child has financial issues or declares bankruptcy, the account could be seized by creditors. Additionally, if the joint account is held with “rights of survivorship,” when you pass away, the entire account will belong to that child, which in turn could frustrate your estate plan.
On the other hand, a POA can provide you with more control over who will act on your behalf and under what circumstances. You can specify the types of decisions your agent is authorized to make, as well as any limitations on their authority. This can provide peace of mind and help ensure that your wishes are carried out in the event of incapacity.
Another advantage of a POA is that it can be revoked or modified at any time, as long as you have the mental capacity to do so. This means that if your circumstances change, you can modify the document to reflect your new wishes.
In conclusion, while adding a child as a joint account holder can provide them with access to your funds, it does not necessarily give them the legal authority to act on your behalf. A power of attorney is a legal document that provides you with more control over who will act on your behalf and under what circumstances. Adam Kitz of Gravis Law, PLLC is an experienced estate planning attorney who can help you understand your options and develop a plan that meets your needs.
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