What a Power of Attorney Can and Cannot Do With a Joint Account
A power of attorney (POA) is a legal document that gives one person the right to act on behalf of another person in financial matters. But that authority has limits, especially with joint checking accounts. A POA cannot sue the other owner of a joint account on their own — they would need to go to court as the representative of the account owner who gave them the power, not as themselves.
The key distinction is this: a POA acts in the name of the person who signed the POA document (called the principal), not in their own name. If money went missing from a joint account or one owner took funds improperly, the principal — the person who created the POA — would be the one filing the lawsuit. The POA would handle the legal process on their behalf, but the case belongs to the principal.
This matters because courts need to know who actually has the right to sue. A POA without the principal behind them has no standing to bring a case, meaning the court will not hear it.
Key Takeaways
- A power of attorney must act on behalf of the principal (the person who created the POA), not in their own name, even when handling joint account disputes.
- The principal — not the POA — is the party with the legal right to sue over money taken from a joint account.
- A POA can prepare documents, gather evidence, and represent the principal in court, but the lawsuit must be filed in the principal's name.
- If the principal is deceased, incapacitated, or unwilling to sue, the POA's authority to act on their behalf ends or becomes complicated.
When the Principal Is Still Alive and Able to Act
If the person who created the POA is still living and mentally capable of understanding what is happening, they remain the one with the power to decide whether to sue. The POA can advise them, gather bank statements and evidence, draft letters to the other account owner, and even attend court hearings — but the decision to pursue legal action belongs to the principal.
In practice, this means the POA might discover that the other joint owner withdrew $5,000 without permission, present that evidence to the principal, and recommend a lawsuit. If the principal agrees, the POA can work with an attorney to file the case in the principal's name. The POA's role is to carry out the principal's wishes, not to make independent legal decisions.
If the principal refuses to sue even though the POA believes they should, the POA cannot override that decision. The POA's authority is broad, but it is not absolute — it exists to serve the principal's interests as the principal sees them, not as the POA sees them.
What Happens If the Principal Is Incapacitated or Deceased
A POA document typically ends when the principal dies. At that point, the principal's estate — not the POA — becomes the party with the right to sue. The person managing the estate (called the executor or administrator, depending on whether there is a will) takes over any legal claims that belonged to the deceased person.
If the principal is alive but incapacitated — unable to understand or communicate — the POA's authority to act continues, but the situation becomes more complex. The POA can still pursue legal action on the principal's behalf, but they may need to show a court that they are acting in the principal's best interest, especially if the case involves significant money or if family members disagree about what should happen.
Some states require a POA to notify other family members or to get court approval before suing on behalf of an incapacitated principal. The rules vary by state, so a POA in this situation should consult an attorney licensed in their state before moving forward.
The Difference Between a POA and Joint Ownership
Being a POA is not the same as being a joint owner of the account. A joint owner has their own claim to the money in the account — they own part of it directly. A POA does not own the account; they only have the right to manage it on the principal's behalf.
This distinction matters in a lawsuit. If a joint owner takes money improperly, the other joint owner can sue in their own name because they have a direct financial interest. A POA who is not also a joint owner cannot sue in their own name — they can only sue on behalf of the principal who created the POA.
If the POA is also a joint owner of the account, they have two separate rights: their own rights as a joint owner, and their authority as a POA. They could potentially sue both in their own name (as a joint owner) and on behalf of the principal (as a POA), but these would be separate legal claims.
Steps a POA Can Take Before Going to Court
Before filing a lawsuit, a POA should gather documentation of what happened. This includes bank statements showing the disputed withdrawal, any written communication with the other account owner, and records of what the principal says happened. Many disputes over joint accounts are resolved without court if one party can clearly show they are right.
A POA can send a formal letter to the other account owner (often called a demand letter) asking them to return the money or explain the withdrawal. This letter should come from the principal or be signed by the POA on the principal's behalf. If the other owner responds and the matter is resolved, no lawsuit is necessary.
If the other owner does not respond or refuses to return the money, the POA should consult an attorney. The attorney will advise whether the principal has a strong case, what the lawsuit might cost, and how long it might take. The attorney will also file the case in the principal's name, with the POA listed as their representative if needed.
When a POA Might Not Have Authority to Sue
The power of attorney document itself sets the limits of what a POA can do. Some POA documents are very broad and allow the POA to sue on the principal's behalf. Others are narrow and restrict the POA to routine banking tasks like deposits and withdrawals. Before taking any legal action, the POA should read the document carefully to see what it actually allows.
If the POA document does not mention the right to sue, or if it explicitly forbids it, the POA cannot file a lawsuit without getting the principal's permission in writing or asking a court to expand their authority. A court can sometimes grant a POA additional powers if the principal is incapacitated and the action is clearly in their best interest, but this requires filing a separate petition.
The POA should also check whether the principal has a healthcare power of attorney or living will in place. These documents handle medical decisions, not financial ones, but they can affect what a financial POA is allowed to do if the principal becomes very ill.
Working With an Attorney on a Joint Account Dispute
A POA who believes the other account owner has wrongfully taken money should contact an attorney who handles civil disputes or contract law in their state. The attorney will review the bank records, the POA document, and the facts of the case to determine whether the principal has a valid claim.
The attorney will also explain the costs involved. Lawsuits over money taken from a joint account can be expensive — attorney fees, court filing fees, and the time required to gather evidence and attend hearings all add up. If the amount in dispute is small, the cost of suing might exceed what the principal could recover, making a lawsuit impractical.
In some cases, the attorney might recommend small claims court, which is faster and cheaper than regular civil court but has limits on how much money you can recover (the limit varies by state, typically between $5,000 and $25,000). Small claims court also does not require an attorney, though one can be helpful.
Frequently Asked Questions
Can a power of attorney sue the other joint owner without telling the principal?
No. The lawsuit must be filed in the principal's name, so the principal will find out. If the principal is incapacitated and cannot be told, the POA should consult an attorney about whether proceeding is in the principal's best interest and whether court approval is needed.
What if the principal does not want to sue but the POA thinks they should?
The POA cannot override the principal's decision. The POA's job is to act according to the principal's wishes, not their own judgment. If the principal is incapacitated, the POA may be able to sue on their behalf, but this is a complex situation that requires legal information.
Does a power of attorney need a lawyer to sue over a joint account?
For small amounts (under your state's small claims limit), no — the POA can file in small claims court without an attorney. For larger amounts or more complex disputes, an attorney is strongly recommended because they understand the rules of evidence and can present the case effectively.
What if the POA document does not mention the right to sue?
The POA may not have authority to file a lawsuit without additional permission from the principal or a court order. An attorney can review the document and advise whether the POA can proceed or needs to ask a court to expand their powers.
Can a POA sue if the principal has died?
No. A POA's authority ends when the principal dies. The executor or administrator of the estate would take over any legal claims. If there is no will or executor, a family member may need to go to court to be appointed to handle the estate.