Authorized signers on a checking account have the ability to write checks against the account, and to make withdrawals and deposits. However, the degree to which an authorized signer has control over an account depends on the terms of the account contract that the individual signed when added to it.
Generally, when you add a signer to your account, your bank regards that person as a joint account owner; he has the same access to, and control over, the account as you do. However, you can obtain a durable power of attorney which enables a named individual to transact on your account on your behalf under certain circumstances, or for a limited period of time. POA signers have no ownership stake in the account. Some banks allow you to add someone as an authorized signer without having to list that person as a joint owner. The bank must have that person sign a contract that explains the signer's exact role.
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Non Personal Accounts
With the exception of accounts owned by sole proprietors, business accounts belong to the business entity rather than an individual. Therefore, business and other non-personal accounts have authorized signers rather than account owners. Banks normally require some kind of documentation, like the entity's articles of incorporation, to show that account signers have some kind of official capacity within the entity that owns the account. Update the account records every time you want to add or remove signers from the account.
Joint account owners have the right to close a bank account without having to gain the permission of the other account owners. Authorized signers on personal accounts cannot close accounts unless a durable POA or other legal document specifically gives them the power to do so. On a business account, signers can close accounts; but many banks require at least two account signers to close a non-personal account, and refuse to close an account if only one named signer attempts to do so.
If you named someone as the pay-on-death beneficiary of your personal account, the Federal Deposit Insurance Corporation provides $250,000 of deposit insurance coverage for that person. Joint account owners are also protected, but other types of authorized account signers are not covered by FDIC insurance. On a business or nonprofit account, the FDIC provides insurance coverage for the entity, but does not provide additional insurance coverage for any of the account signers.
- Bankers Online: Limits on Authorized Signer; Randy Craye and John Burnett; March 2011
- Banking Questions: Responsibilities of Authorized Signer on Account; September 2008
- Federal Deposit Insurance Corporation: Ownership Categories Revocable Trust Accounts; July 2010
- Federal Deposit Insurance Corporation: EDIE the Estimator