Limit bank power of attorney: how to protect your account from misuse

Not only for older people it can be useful to issue a bank power of attorney to a trusted person. But be careful: with such a power of attorney, the person of trust gets access to the entire account balance and may even use the overdraft facility. But there are ways to limit the powers of proxies.

As a rule, only the account holder has the right to dispose of his account. In the case of underage children, parents or legal representatives are also allowed to carry out banking transactions. They do not need a power of attorney from the child.

If an additional person is to have access to the account, a written bank power of attorney must be issued for this purpose. Most financial institutions have their own forms for this and only accept these or a notarized document.

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If there are accounts at different banks, a separate power of attorney must be issued for each account.

Power of attorney grants wide-ranging access

However, you should bear in mind with the notarial variant that this power of attorney grants far-reaching access: Due to the high legal security of a notarized bank power of attorney, the authorized person may even take out a loan or manage business assets. But a power of attorney can be revoked at any time.

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Normally, a bank power of attorney is unlimited and applies to all accounts at the account-holding bank, including a granted overdraft facility or a securities account, if available. Although the authorized person may not take out a new loan – if this is not provided for in the power of attorney form – he or she may overdraw the account. The account holder must be liable in the end.

Possibility: limit access

Who does not want to give the control completely out of the hand, can limit the bank power of attorney. For example, a monthly limit can be set up to which the authorized representative may withdraw money from the account.

Once the limit is reached, the authorized person must justify further withdrawals. If it is agreed that the trusted person may withdraw money for his own gifts, for example for a birthday or Christmas, I recommend that these sums are also explicitly limited in the power of attorney.

Another control mechanism can simply be the appointment of an additional person who checks account transactions and to whom the authorized representative must report once a year.

Documents for a power of attorney

Those who are to receive a power of attorney need a valid identity card or passport, which they must show to the financial institution. In the case of direct banks, authorized representatives usually have to send a copy of the identity card with the account. It is also possible to prove identity by means of the Postident procedure.

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