Banking joint account or power of attorney – which makes sense?

A young couple is in a good mood, weighing up whether a joint account or a power of attorney is the better solution

If several people want to jointly manage an account, then there are two ways to do this: Joint account and bank power of attorney. Also a combination is possible, thus a community account with additional powers of attorney for third parties. However, the basic principle of the two options differs considerably, so you should think carefully about your choice.

Here you will find all the important information and helpful tips on the topics of joint accounts and power of attorney.

What is a joint account?

A joint checking account or securities account is opened by two people who have equal rights to manage the account. Both people are allowed free use of the account and are each given appropriate checking cards and online banking access, and if necessary. Credit cards.

Good to know: From the bank’s point of view, it does not matter whether one account holder also acts in the interests of the other account holder when making transactions, because both are entitled to dispose of the account on an equal footing. Both account holders are liable for loans taken out in any case – regardless of which of the two took out or caused the loan.

What is a power of attorney for an account?

An account power of attorney (or power of disposal) authorizes and empowers a person to carry out transactions on behalf of the account holder. The credit balance therefore continues to belong to the account holder, the authorized representative should only be able to regulate certain banking transactions as the person authorized to dispose of the account.

Good to know: The rights and options of the authorized representative are limited. For example, the account may not be cancelled and no new checking or credit cards may be applied for. However, authorized persons are allowed to use the full credit limit. The account holder is always the liable debtor, as all banking transactions are carried out in his or her name.

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The differences between joint account and power of attorney

The main difference is that in a joint account, both holders have equal rights and equal responsibility. In the case of a power of attorney, both parties do not have equal rights, because the authorized representative may only act on behalf of the account holder. Conversely, only the authorizer is responsible for transactions and credits.

How many people can open a joint account?

As a rule, only two people may share a joint account. This is also the case with comdirect accounts. However, up to five powers of attorney may also be issued for a joint account. Thus, a total of up to seven persons can dispose of one account. It is always important that the parties involved are absolute confidants.

How many persons can be granted power of attorney for an account?

Good to know: Account powers of attorney can be revoked by the account holder at any time.

Up to five powers of attorney can be issued for an account at comdirect, regardless of whether it is an individual account or a joint account. The powers of attorney may differ in individual cases.

Both account holders must make deposits into a joint account?

No, there is no such regulation. However, if mainly one account holder makes payments, this can be compensated for by the other account holder Gift tax become due. The allowance for gifts between spouses is 500.000 Euro within 10 years. If the account holders are not married, the exemption amount is only 20.000 euros. This amount is quickly reached, so you should be careful here!

Example: An unmarried couple shares a joint account, with only one of the two making deposits. In order to avoid gift tax, a maximum of 4000 euros per year may now be paid in, so that the share of the non-paying account holder does not exceed 2000 euros per year over a period of 10 years. If the two were married, then the depositing account holder would be allowed up to 100.000 Euro per year to be paid into the joint account.

Who is liable for a joint account?

In the case of a joint account, it does not matter for liability who is responsible for the origin of the debt. Both account holders are jointly and severally liable in each case. Thus, both parties are equally responsible and liable for ensuring that the debts are settled. If one of the account holders is unable to do so, the other holder is automatically liable for this part of the debt as well.

Can a joint account be seized?

Here, too, the principle of joint and several liability applies. If there is a garnishment against one of the two account holders, the entire balance of the joint account can be seized for repayment. The only exception to this is the special form of joint account known as an "and account".

Joint account as "or account" or "and account"

Theoretically, there are two ways to operate a joint account. In an Or account, each account holder can dispose of the account individually. In the case of an AND account, both account holders must carry out the banking transactions jointly. In practice, this makes account management so complicated and time-consuming that such "and" accounts are hardly ever offered. At comdirect, therefore, und accounts are not offered; a joint account here is automatically an Oder account.

Who inherits the balance on the joint account in the event of death??

The legally designated heir or heirs are entitled to the share of the total assets to which they are entitled. Inheritance is therefore not automatically the second account holder. How high the share to be inherited is cannot be answered in general terms and depends on the individual agreements of the account holders and the deposits made. If no clear conclusions can be drawn here, a flat rate of 50% of the credit balance is inherited.

Who inherits the assets in the event of death in the case of a power of attorney over an account??

There are powers of attorney that only take effect in the event of death or end with death, but these are less common and are not offered at comdirect. Most powers of attorney are valid beyond death (transmortal power of attorney). However, an authorized representative is not automatically the heir. Even after the death of the original account holder, he or she may only carry out transactions in the original account holder’s interest.

The three-account model for couples

For various reasons, couples do not always want to keep only one joint account. In such cases, the constellation of a three-account model is an option: Each of the partners has his or her own account, which only he or she can use. In addition, there is a joint account that is used, for example, for household expenses. In this way, each person retains his or her financial independence and yet joint expenditures can be made in an uncomplicated manner.

How to obtain a power of attorney for your parents’ account?

Powers of attorney are often issued by parents to their children, so that they can dispose of the parents’ accounts in case of emergency. Such powers of attorney, like all other powers of attorney, must also be recorded in writing and submitted to the bank. It does not matter whether the parents have individual accounts and/or joint accounts. The relationship between the authorized representative and the grantor of the power of attorney does not play a role either.

Conclusion: joint account or power of attorney?

Joint accounts can only be set up for two persons and entail great risks with joint and several liability. That is why such accounts are mostly used by couples. If the couple is married, the scope in terms of gift tax is also greater, unmarried couples must pay close attention here.

If you have any further questions or would like advice, simply contact our customer service staff via the Contact form or directly by phone at 04106 – 708 25 00. Our customer advisors are available for you around the clock!

Through powers of attorney, more than two people can dispose of an account. However, the authorized person and the person granting the power of attorney do not have equal rights, and liability also ultimately lies with the account holder. This is why powers of attorney are usually created as precautionary measures for emergencies.

In each individual case you must decide which option is best for you. Keep in mind that joint accounts with additional powers of attorney for third parties are also possible.

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