One of our customers opened a deposit account for a trust under a Power of Attorney document. He frequently is out of town and would like to appoint an authorized signer to sign checks in his place. In the alternative, he would like to add the authorized signer as a joint owner on the account. Is that permissible? The Power of Attorney document gives him the power to “open new accounts,” among other powers.

Yes, an agent under a power of attorney generally may appoint an authorized signer for a deposit account, unless the power of attorney document prohibits the appointment. The Illinois statutory power of attorney form states that an agent “will have authority to employ other persons as necessary to enable the agent to properly exercise the powers granted in this form.” If the agent’s power of attorney document includes similar language, and it does not prohibit the agent from employing others to exercise his powers, the agent may appoint an authorized signer for the account.

However, we do not recommend permitting the agent to add a joint owner to the trust account. Adding the authorized signer as a joint owner would permit the authorized signer to withdraw the account in its entirety and may establish rights of survivorship for the authorized signer, which may contradict the trustee’s intent for the trust funds. At least one Illinois court has held that an agent under a power of attorney may not add joint owners to the principal’s bank accounts unless specifically permitted by the power of attorney document or instructed to do so by the principal. As explained in the Illinois Power of Attorney Act, Illinois’ statutory power of attorney form does not permit an agent “to exercise powers to appoint to others or to change any beneficiary . . . under any . . . joint tenancy,” and it is unlikely that your customer’s power of attorney form permits him to designate beneficiaries for the principal’s property.

For resources related to our guidance, please see:

Illinois Power of Attorney Act, 755 ILCS 45/3-3(d) (“NOTE: Your agent will have authority to employ other persons as necessary to enable the agent to properly exercise the powers granted in this form, but your agent will have to make all discretionary decisions. . . .”)

Illinois Power of Attorney Act, 755 ILCS 45/3-4 (“Explanation of powers granted in the statutory short form power of attorney for property. . . . The agent may act in person or through others reasonably employed by the agent for that purpose and will have authority to sign and deliver all instruments, negotiate and enter into all agreements and do all other acts reasonably necessary to implement the exercise of the powers granted to the agent.”)

Joint Tenancy Act, 765 ILCS 1005/2(a) (“When a deposit in any bank or trust company transacting business in this State has been made or shall hereafter be made in the names of 2 or more persons payable to them when the account is opened or thereafter, the deposit or any part thereof or any interest or dividend thereon may be paid to any one of those persons whether the other or others be living or not . . . .”)

Illinois Power of Attorney Act, 755 ILCS 45/3-4 (“[T]he agent will not have power . . . to make gifts of the principal’s property, to exercise powers to appoint to others or to change any beneficiary whom the principal has designated to take the principal’s interests at death under any will, trust, joint tenancy, beneficiary form or contractual arrangement. . . .”)

In re Estate of Mitchell, 2011 WL 10490840, *14 (5th Dist. 2011) (“Edward, however, used the power of attorney to transfer Clyde’s bank accounts into joint tenancy accounts, designating himself as a co-owner of the accounts with the right of survivorship. This transfer would constitute either a gift or an appointment of a contingent beneficiary of the accounts. . . . Edward exceeded his power of attorney authority when he signed the financial documents changing the ownership to those accounts.”)