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What’s the difference between POAs and joint ownership?

On Behalf of | Aug 17, 2021 | Estate Planning |

For those in the estate planning process, they are likely familiar with a power of attorney and the concept of joint ownership. However, how these two things interact is not always clear, which leads some to question the difference.

Power of attorney

A POA allows someone to appoint another (their Attorney-in-Fact) to conduct business on their behalf. This means that the AIF in the POA can sign for the person that elected them as their AIF. For estate planning purposes, typically, the POA would allow the AIF to access bank accounts, make deposits, write checks, pay bills, etc. for the person that elected the AIF. For example, one could appoint their child as an AIF in a POA to allow them to handle their affairs if they are incapacitated or pass away.

Joint ownership

However, while the POA gives the AIF the power to act as the person who drafted the POA, it does not give the AIF an ownership interest in any of that person’s accounts or assets, even though they effectively have the power of the owner. This is not the case for joint ownership accounts, where someone is listed as a co-owner. For that co-owner, they have equal ownership of all account assets, which includes all the powers of an AIF.

Some key differences

Ownership does not just grant rights. It also comes with liabilities and responsibilities, like account maintenance costs, credit lines, margin accounts, etc. And, a co-owner does not have a fiduciary duty to the primary account holder, like the AIF in a POA. This means that the co-owner, unlike the AIF, does not have to act in the best interests of the primary owner (POA drafter). Instead, they can treat those assets as their own money and do with it as they want.

What happens at death?

For a joint ownership account, when one of the owners dies, the surviving owner becomes the sole owner of the account assets and liabilities. If one has a JOA and a POA, the AIF does not necessarily have access to that JOA, even if a will instructs that POA to distribute those assets. Indeed, depending on one’s estate plan, the joint owner on the JOA would have exclusive ownership of that account. As Fort Lauderdale, Florida, residents can see, even these simple estate planning concepts can become tricky quickly, which is why many elect to get help.




Photo of Jennifer D. Sharpe