Often we see people, or their bankers, making an agent under financial power of attorney (also called “attorney-in-fact”) a joint owner of bank accounts. This practice is so common, and so problematic, that it deserves its own post aside from “Power of Attorney: Dos and Don’ts“, which we recommend reading first if you haven’t already.

So with your financial or general durable power of attorney (“POA”), you’re about to go to the bank and add your agent to your accounts. Perhaps you didn’t know about the advice in Power of Attorney: Dos and Don’ts to do this within six months. Maybe you think you’ll just do an end run around the bank’s policies by making your agent a joint owner of your accounts, because – in spite of there being no expiration in Arizona law on Durable Powers of Attorney – the bank won’t accept your POA because it was drafted more than six months ago.

Or maybe your agent is pressuring you to make things “easier” by just making him or her a joint owner on the account. (WARNING! This is a major red flag as to your agent’s true intentions!)

It might be tempting. You may think you’ll save money by doing this, avoiding another trip to the attorney’s office to update the signature page.

Maybe you just don’t understand the potentially catastrophic consequences.

We have encountered many situations in which a person tried to avoid paying an attorney to draft estate planning documents and thought they could accomplish the same thing by making a friend or family member joint owner on the accounts. It just doesn’t work out the way you might have envisioned.

Whatever the reason you might consider doing so, do not – under any circumstances – make your attorney-in-fact a co-owner of your account.

Why? Because when you do so, you just made that joint owner an owner of your funds. Not a beneficiary when you pass, which may be your intent. A joint owner is an owner. Right now. Today. Even if all of the income going into the account is your sole and separate income. Even if that’s the only income you have.

In the previous article we explained that misuse of a power of attorney – using the principal’s money for anything other than the principal’s benefit – is theft. However, if you make your agent a co-owner on your account and he or she drains all of your funds for his or her personal use, sadly, no crime has been committed per the letter of the law. After all, the police will tell you, you voluntarily made them a co-owner while you were of sound mind to do so.

This means your agent can use any and all funds in the account however they choose, even if the income being directly deposited into the account is 100% yours.

But, you’re not worried about that, you say, because you followed our advice and appointed an agent you can trust. So this isn’t a concern to you, right?


What if you die, and you intended for the funds in the account to go to your beneficiaries named in your will? Whoops, now your bank account – titled with your joint owner – belongs to that joint owner in spite of any estate planning to the contrary. Joint bank accounts are classified as joint ownership with right of survivorship.

You might have intended for all of your money to be divided equally among your children. If only one of your children is joint on the bank account, or someone else entirely who isn’t even a beneficiary of your estate is the joint owner, your Last Will and Testament doesn’t apply to that account. The joint owner becomes the owner, outright, after you pass. This might have even further consequences for your estate. For example, what if those funds are the only funds available to pay for your last expenses, taxes on your property, etc? There will be no funds to pay for those things, meaning your entire estate is in jeopardy and your intended beneficiaries may end up inheriting nothing at all.

What if your agent becomes incapacitated or dies while you are also incapacitated, and you don’t have a successor agent named in your documents? This means you’re going to probate court. Although the court may appoint a conservator to marshal your funds, your conservator will not be allowed to take control of funds in any account on which there is a joint owner.

Although a conservator can re-direct income into a new conservatorship account to use solely for your benefit, there is almost nothing that can be done to take control of the funds accumulated into the account. Sometimes those accumulated funds are significant and having to live without them is financially devastating.

In fact, if you’ve made someone else a joint owner of those funds, and the joint owner doesn’t (or can’t) voluntarily turn them over to your conservator, you probably won’t even qualify for Medicaid for long term care (called “ALTCS” in Arizona, for the Arizona Long Term Care System). ALTCS (pronounced all-tecs) will see this as a transfer of funds, and will disqualify you for the amount that you “gave” to your joint owner, even if you didn’t understand that you were “giving” this money away.

The bottom line here is that there is no substitute for good estate planning and there are no shortcuts around your attorney’s advice. Your bank and financial institutions have procedures and policies in place to name an agent to act for you if you are unable to manage your own affairs. Follow those procedures as well as your attorney’s advice.

It doesn’t cost as much as you might imagine to do simple estate planning with a qualified attorney. The alternative can be costly at best and disastrous at worst.

The information here is not a substitute for legal advice from a qualified estate planning attorney. In case we didn’t make it abundantly clear in the above, we believe there is no substitute for qualified legal advice. If you have questions about estate planning, please contact an attorney.

If you need referrals to a qualified estate planning attorney, or need a trustworthy agent to name in the event you can no longer fully manage your financial affairs on your own, contact us and request an appointment. We won’t take shortcuts with your future.