A power of attorney (POA) is a legal document that grants one person (an agent) the power to make decisions on your behalf in certain circumstances. Normally, there is a limit to what the agent can do with this power, which prompts the question, “Can a POA withdraw money from a bank account?”
The answer is yes, but only if the POA specifically authorizes them to do so. If bank access is not covered in the POA, then they will not be able to transact.
Understanding the basics of power of attorney
Once you have assigned someone a POA, they will typically have legal rights to make decisions relating to your finances, property, and medical care on your behalf. These rights can also extend to making transactions with your bank account. But what does POA mean on a bank account?
The agent can only access your bank account if the document specifically grants them this authority. The POA must also comply with the state’s laws and the bank’s policies before an agent can transact. There are instances where POA will not work for bank transactions, like when the document has expired, does not meet the legal requirements, or you have died.
How a POA can withdraw money from a bank account
Below are important steps an agent needs to take when withdrawing money from a bank account with a POA.
Gather required documents
Financial institutions require the agent to provide the original copy of the POA as well as identification documents such as a passport or driver’s license. These documents act as proof that the person is authorized to act on behalf of the principal. The principal must also sign the POA before an agent can withdraw money from their bank account.
Specify the amount
The principal should clearly state the amount of money the agent is authorized to withdraw and how they intend to use the funds. Some banks may limit the amount of money you can withdraw in a single transaction.
Head to the bank
Once you have all the documentation ready, you can go to the bank and present the documents to a bank representative. The bank will check the documents and make sure the POA is legal and valid before allowing the power of attorney transfer.
Keep records on file
The agent should maintain detailed records of all withdrawals made. They should also provide the principal with regular account statements to keep them informed of their financial activity. These records help protect both the principal and the agent in the event of any disputes or misunderstandings in the future.
What to know about a POA agreement
The POA lists the specific powers the agent can exercise on behalf of the principal. The document may prohibit the agent from making certain decisions. Here is what you need to know about POA agreements:
Everything must be in the best interest of the principal
The agent in charge of a POA bank account has a legal duty to act in the best interests of the individual and must not use their assets for personal benefit. They cannot legally transfer money to their personal accounts without written consent for a specific purpose. In case of any irregularities in transactions, the principal has the right to take legal action.
Banks can have their own requirements
Financial institutions take their obligation to protect their customers and their privacy seriously. As a result, the agent is required to follow certain steps to ensure that the process is done legally and correctly. The policies and procedures regarding POAs vary from one bank to another. Some banks may let the agent withdraw money with just the POA document, while others may need more proof or documents.
There is a time window
The POA specifies the duration of the agent’s authority to act on behalf of the principal. Once the specified period of time has elapsed, the agent’s authority to withdraw funds will also expire.
Generally, a POA is valid until it is revoked by the principal or until the principal dies. However, some POAs may have a specific expiration date.
Access to other accounts can be limited
While a power of attorney can grant an agent the authority to manage the principal’s finances, this authority does not automatically extend to all of the principal’s financial accounts. For instance, the POA can limit the agent’s access only to the current account and restrict access to other accounts like retirement accounts, investment accounts, or real estate. The agent, in this case, cannot access these accounts without the principal’s permission.
Decision-making is limited
It’s important to remember that the agent can only make decisions up to the level of power given in the POA document. This means that the agent cannot make decisions outside of the principal’s wishes or act beyond the authority granted to them in the POA.
Choosing A Trusted Agent And Understanding The Legal Implications
A POA is a critical legal document that should not be taken lightly. The document can have significant implications — especially because it allows the agent to withdraw money on behalf of the principal. The principal needs to choose someone they can trust. The agent should also remember that they are acting on the principal’s behalf and must comply with all the rules concerning POA to avoid legal action.
FAQ
Can a power of attorney transfer property to themselves?
The power of attorney cannot transfer property to themselves. Any unauthorized transfer of property by the agent to themselves would be a breach of this duty and could result in legal action and penalties.
Can a POA deposit a check to themselves?
A power of attorney cannot deposit a check made out to their own accounts if the document does not authorize this transaction. The agent’s authority is limited to what is indicated in the POA agreement.
Is a POA responsible for paying bills?
A power of attorney can be responsible for paying bills on behalf of the principal if this is specified in the POA document.
