If you have Power of Attorney you don't need a joint account

Powers of Attorney continue to be poorly understood by the people who are forced to rely on them. I was reminded of this over the weekend when I spent some time talking with someone who couldn't understand why his parents' bank wouldn't let him use his parents' Power of Attorney to put his name on his parents' accounts as a joint owner.

My first thought when hearing about this scenario was that if you have a Power of Attorney you already have full access to the account. You can already do everything you need to do, such as pay bills, deposit money, roll over investments and obtain paperwork. So why would you need to be added as a joint account holder?

The big difference between having Power of Attorney access to the account and joint owner access to the account is ownership. When using a Power of Attorney you are supposed to be using the account to carry out financial transactions to benefit your parents, and you don't own the asset. When you add your name as a joint account holder, you are basically giving the money to yourself as all joint owners own the funds. That's hardly in your parents' best interest, is it?

A Power of Attorney doesn't give you the right to take assets for yourself. In fact that's the very opposite of what a Power of Attorney does.

Of course the bank isn't going to allow you to use a Power of Attorney to give your parents' money to yourself. Given the epidemic of elder financial abuse, I applaud the bank for being vigilant and knowing the limits of a Power of Attorney document. I'm sure that in this case there was no fraudulent intent by the child holding the Power of Attorney, but the bank doesn't know that, and was right to refuse the request.

At this point in the conversation, the child holding the Power of Attorney protests that he or she only wants to be added to the account to help the parents with financial transactions. But as I said at the beginning, the Power of Attorney does that for you.

I have heard of a growing movement among lawyers to suggest to their clients that they include a certain clause in their Powers of Attorney. The clause would say that the person they are naming under the Power of Attorney would not be able to use the document until they had spent an hour with a lawyer learning about what they could and could not do. I'm completely in favour of that.