Shortly before Christmas a Lake Tapps woman was sentenced to two years in prison for stealing more than $200,000 from her elderly father, who has dementia. The woman said she was addicted to gambling and had convinced herself her father thought it was OK. It's a sad and all-too-common scenario. It's one that families can plan ahead to try their best to avoid.
The thefts were accomplished easily because her father had made her a co-signer on his bank account. While making a loved one a co-signer on a bank account can be helpful, a better solution is to execute a Durable Power of Attorney document to allow a trusted family member or friend to manage your assets if you become incapacitated. Your trusted friend could then manage your money, spend it on your mortgage or rent, your retirement home fees or nursing home care, your food and transportation, and even make gifts for you if you had an established pattern of doing so.
With a Durable Power of Attorney, family members or other interested parties have the right to request that the person managing your money - called your Attorney in Fact -provide a regular accounting. They also can ask the Court to order them to provide an accounting. The Attorney in Fact must keep careful records of how the money is managed so they can show other parties, or a judge, how the money was spent. If the Court finds problems, they may remove the Attorney in Fact and put the alternate in his place.
A Durable Power of Attorney has another benefit: You can nominate your choice of guardian, if one is needed; and often a DPOA saves you from needing a guardianship altogether.
Sharing a bank account with a loved one is problematic for a couple of reasons. For one, there's no accounting requirement. If your family members or friends think someone is stealing from you, there's no way to request an accounting; their only solution may be to call 911 or Adult Protective Services. Additionally, after you die, the contents of the joint bank account generally goes to the surviving account holder - not to your beneficiaries under your Will.
In sum, we recommend using a Power of Attorney document because of its flexibility and accountability. If you are using a Durable Power of Attorney to manage a loved one's money, contact your attorney if you have any concerns about your decision-making.