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Here's How They Can Help

If you’re thinking about how your finances will be managed as you age or navigate life changes, it is a good idea to plan ahead. A Power of Attorney and/or a Joint Bank Account are tools that can help you manage your money.

What is a Power of Attorney?

It’s a document that gives one person (or more) the authority to manage your money and property for you.

What is a Joint Bank Account?

It’s a bank account held by two or more people who share ownership of the funds in the account.

How do they work?

A Power of Attorney for Property allows someone to make decisions about your property and finances on your behalf. The terms of the Power of Attorney outlines what an attorney(s) can do on your behalf. For example, they can sign cheques, handle your banking or even sell real estate for you. It can give you peace of mind that someone you trust will be able to make financial decisions to ensure your well-being in the future.

Joint account holders have shared ownership of the funds in the account and can deposit, withdraw or handle the funds in the account—no matter who puts money into it. Joint accounts are commonly used by two or more people to pay bills or handle expenses together.

What are the benefits and risks?

It is important to be aware of the advantages and risks associated with a Power of Attorney and/or a Joint Bank Account before deciding whether they are right for you.

Benefits & Risks
 

Benefits

Risks

 

Benefits

Risks

Power of Attorney
  • Can permit someone to look after your financial affairs if you become unable to do so
  • Expressly authorizes someone to act on your behalf and outlines what they can do
  • Allows you to appoint two or more attorneys, which can help reduce the potential mismanagement of your finances
  • May make you vulnerable to financial abuse if your attorney(s) doesn’t make decisions that are in your best interest.
  • Multiple attorneys may disagree causing delays when making decisions or give rise to disputes
  • Requires regular review to ensure it is up to date
Joint Bank Account
  • Allows joint bank account holders to save funds together
  • Permits joint account holders to manage shared expenses including banking and bill payments
  • Allows joint account holders to see all transactions going through the account
  • Less control over how your money is handled
  • Any person named on the account can withdraw money at any time and without your consent
  • The funds in a joint account could be subject to claims by creditors which did not arise from you.

What should I consider before deciding which is best for me?

Whether you’re appointing an attorney or opening a joint bank account with somebody, it’s important to make sure the person you choose is someone you trust and has your best interests in mind.

If you are choosing an attorney—this may be your spouse, a close family member or friend—you may also want to ensure that whomever you choose:

  • Knows how to manage money and property
  • Is reliable and available to take on this responsibility
  • Clearly understands what is expected of them

If you decide to open a joint bank account make sure you understand the risks associated with sharing ownership of your funds.

It is always a good idea to speak with an RBC Advisor to help review your banking needs for your specific situation. You should also seek legal and tax advice in considering your options.

What are some key differences between a Power of Attorney and a Joint Bank Account?

Ownership of Funds: An attorney is not entitled to use your money for their own personal benefit. Under the personal account agreement, joint account holders are entitled to use the money in a joint account for their personal benefit.

Limitations: A Power of Attorney lets you limit what your attorney can do with your money. Unless all joint accounts holders are required to act together, there are no limitations on how joint account holders may use the funds in the account.

Accountability: An attorney is accountable to you and must act in your best interests. Joint account holders are not accountable to other joint account holders and may act for their own benefit.

Estate Planning: Granting a Power of Attorney has no direct effect on your estate plan as your funds remain in your name. Under the account agreement, the funds in a joint bank account pass to the surviving joint owner(s) by right of survivorship, subject to certain exceptions (i.e. Quebec).

Not Sure What’s Right for You?

To Learn more about Powers of Attorney and joint bank accounts, read the RBC guide: “Appointing a Power of Attorney” or review the “What Every Older Canadian Should Know About Powers of Attorney and Joint Bank Accounts”. Powers of Attorney and joint bank accounts are governed by the terms of the personal deposit account agreement.

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