As people grow older and begin to fear losing some of their abilities, they often grown concerned about how their money would be handled and bills paid were they to become temporarily or permanently disabled. Many jump to the conclusion that they should add their adult child’s name to their bank account, believing that doing so is the easiest and smartest solution. Though it certainly does make things easy for the bank, and a bank officer is likely to encourage you in your decision, it is not the smartest or even the safest thing to do from a legal perspective. When you add another person’s name to a bank account they become a joint owner of the account, and this can open the door to a number of vulnerabilities and unforeseen results. If you are considering taking this type of action, contact the estate planning attorneys from the law firm of Bratton Scott and let us advise you on a better way to accomplish your goals.
There are a number of reasons why adding an adult child onto your bank account as a joint owner can be a mistake. Here are just a few:
- If you have more than one child and only add one child’s name to the account, that child is automatically the owner of the account after you die, and your other children will be prevented from receiving the funds.
- As joint owner of the account, your child is now equal owner of the funds within and can use them for anything they wish, without your consent. Even if you have no concerns about your child’s spending decisions or money management, the funds become part of the child’s assets and are available as payment for their debts and liabilities, including if they were to cause an accident, get divorced, or suffer an illness or injury for which they incurred their own medical bills.
- Placing money into a joint account will not shelter your funds from being available for payment for nursing home care. Any account on which your name is present will be viewed as entirely yours when that calculation is made.
- Placing money into a joint account can have adverse tax or financial aid consequences for your adult child.
It is a very good idea to provide your adult child with the ability to pay your bills from your bank accounts, but there are better ways of accomplishing this goal. Specifically, you can request that your child be given signature authority on your checking account, which will enable them to pay your bills but not to use your money or be available to their creditors. Though the bank officer may try to encourage you to go with your original idea, they do this in order to make life easier for themselves – not for you. Though it is more convenient for the bank employees to be able to match a signature to a name that is printed on a check rather than having to check their records, it is more important to look out for your own interests rather than theirs.
Being concerned about your financial wellbeing and wanting to ensure that everything will be done according to your wishes as you age is a smart move. The elder law attorneys at Bratton Scott have an extensive knowledge of estate law, and can help you to make the decisions that best meet your goals. Call us today to set up a free consultation.
Learn more about Elder Law and Your Financial Assets HERE.