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May 21, 2010


Todd Okun

1. You suggest that removing a joint owner from a joint account is a matter of what is written in the credit union’s deposit contract. In fact, it is most often a matter of state law. I know this is the case in California where code sections specifically address multiple-party accounts. Further, while it is advisable to address this issue in a deposit contract, it is not a required provision and is often not addressed. In any event, if it is addressed, it must comply with state law.

2. You also suggest that using a POA or authorized user will overcome the problems inherent in the joint account scenario. However, the only problem that is overcome is the the inability to remove the other joint account holder and even in that scenario it can be overcome by the joint owner draining the account and opening a different account. The POA or authorized user is just as capable of legally draining the account as is the joint account holder. In addition, a POA is typically used to empower the holder to act on behalf of a principal who cannot himself act either because he is incapable of acting, is out of the country or some other reason. In fact, in over 33 years of practice as a lawyer at the NCUA and in representing credit unions, I have never seen a POA used solely for this purpose when the principal is capable of acting on his own. Further, in recommending the use of POA, the credit union then needs to deal with the issue of whether or not a given POA is valid under state law. In addition, members and customers will not be anxious to hire lawyers to provide POAs or even to search for free ones on the internet. Finally, it simply is not a good idea for the credit union to subject itself to potential liability for recommending any course of action to protect the member that might not turn out to be successful, particularly if it provides a template POA to the member.

I think the important point to be made is that in taking on a joint account owner, as well as in giving someone a POA or making them an authorized user, a member had better make sure that he has chosen someone he can trust because he has potentially given away the keys to the vault.

Diane Hatcher

Anthony, Sounds like a good topic to plagiarize for our newsletter. :-)

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