Appointing a power of attorney (POA) for bank accounts is a practical strategy to allow someone to manage your finances and investments on your behalf. Understanding the role of a POA agent can help you decide who to designate, and knowing their responsibilities, rights, and limitations can offer peace of mind.
Along with naming beneficiaries and estate representatives, designating powers of attorney is an essential step in your estate planning checklist. If you don’t know how to add a power of attorney to a bank account or are unsure whether you should, we’re here to help. Follow along as we break down the steps to adding a power of attorney to financial accounts and what to expect when you appoint someone as an agent.
What Is a Power of Attorney?
A power of attorney is a legal document naming a person an “agent” for someone else. It gives the agent the authority to act on the person’s behalf. A financial power of attorney is appointed to manage your monetary affairs, including accessing your bank accounts, paying bills, and making investment decisions.
Powers of Attorney Rights and Limitations
The purpose of a power of attorney for bank accounts is to allow someone to act in your best interests and manage your affairs. The agent’s role comes with many rights, but it also has limitations and overrides you should understand before selecting someone.
Here are some common questions about powers of attorney rights and restrictions:
Does a Power of Attorney Give You Access to Bank Accounts?
A power of attorney grants an agent access to designated bank accounts if and when certain stipulations are met, such as the account holder is incapacitated or unable to complete certain tasks due to extended travel, military service, or other reasons.
Remember that a power of attorney is not the same as a joint bank account owner. The agent appointed by a POA does not own your money and should only be empowered to act in your best interest. Banks that accept power of attorney may protect account holders by requiring additional documentation and identification before allowing certain transactions.
The language in the POA documentation and state laws defines agent access restrictions.
Can a Power of Attorney Change the Beneficiary on a Bank Account?
Yes, an agent may change beneficiaries on financial accounts they manage on someone’s behalf if the bank verifies that the POA meets legal requirements. If the POA does not explicitly grant this authority, the agent’s actions may be challenged and require additional documentation.
Can a Power of Attorney Open or Close a Bank Account?
Yes, a power of attorney grants an agent access to open or close a bank account as long as the financial institution can verify that the documentation meets the state’s legal requirements. Banks that accept power of attorney will require the document to be on file or presented, and will verify the agent’s authority; in some cases, the bank may request a meeting with the account holder and agent to verify the account change.
How To Set Up a Power of Attorney for Bank Accounts
You can set up a power of attorney for financial accounts using forms you drafted or those written by an attorney. Your budget and comfort level will determine which scenario works for you. A lawyer costs more than drafting a POA yourself, but he or she may provide valuable advice if you’re unsure of the ideal setup for your situation.
Here are four general steps to setting up a power of attorney for your bank accounts:
Step 1: Learn State Requirements
Each state observes guidelines for setting up a power of attorney for bank accounts, including document type, witness signatures, age requirements, and other specifications. The rights of agents can also vary by location. If you are unsure of any requirement for adding a POA to a financial account, ask a lawyer or your local bank for clarity.
Step 2: Select an Agent for the Power of Attorney
Choose someone you trust implicitly to assume a power of attorney, an individual who understands your wishes, and who will make sound decisions on your behalf. Discuss this role with the person you choose to help them understand their responsibilities and limitations.
Step 3: Draft POA Documents
You can create POA documents on your own or with a legal representative. Be specific in your directives so that the document outlines any rights and restrictions for your agent. You can grant access to all of your bank accounts or only specific ones, such as your checking account. If you have a safe deposit box through your bank, consider whether the agent needs access and include those details in the document.
Next, you’ll want to have your POA documents signed and notarized. Your local Arthur State Bank branch notary can help you with this step. Contact your bank before arriving to make sure you have all the necessary documents to streamline your appointment.
Step 4: Add POA to Your Bank Accounts
It’s smart to set up your POA on accounts before you need them. This is a fairly simple process. To add a POA to your bank account, submit the signed, notarized legal document to the financial institution holding the relevant accounts to review and confirm.
Banks like Arthur State Bank that accept power of attorney documentation will first verify that the documents comply with legal requirements. They will then confirm the identities of the account holder and the agent before adding the paperwork to the appropriate accounts.
How To Access an Account as a Power of Attorney
For banks to accept a power of attorney, the agent must present valid identification matching the documentation on file or provide a copy of the POA if it hasn’t been submitted to the financial institution. Before granting access, the bank will review the information to verify the validity of the request.
Tips for Managing a Power of Attorney
Assigning an agent isn’t a set-it-and-forget-it process. Planning and maintaining your directives is key to managing your finances if an unexpected event occurs. A few reminders for managing your POA for bank accounts include:
- Revisit your agent designation periodically to make sure it still matches your wishes.
- For clarity, prepare a binder or file listing all banks that accept powers of attorney.
- Proactively add the power of attorney to your bank account to help prevent barriers later.
- If you move to another state, review your power of attorney documents to ensure they’re still legally binding.
Adding a Power of Attorney to Your Accounts? Let Arthur State Bank Help.
Proudly serving South Carolina since 1933, Arthur State Bank offers accounts, in-person services, and convenient digital solutions to help you achieve all your financial goals. To learn how Arthur State Bank can help you with banking needs ranging from checking and savings to retirement accounts, mortgages, and other personal loans, visit arthurstatebank.com.
