Some people are lucky enough to have adult children living close by to help out with finances and paying bills. Perhaps you are one of those parents who has decided to put an adult child’s name on your bank account in order to facilitate this arrangement.
While this strategy may seem like a reasonable solution on the surface, it is not a recommended approach. First of all, if your child’s name is presently on your bank account, the child has equal ownership of the assets. This “joint account” gives the child the legal right to withdraw money for any purpose. Right now! The money belongs to the child as much as it belongs to you.
A second problem arises if your child has creditors or is married. The money is considered fair game for your child’s creditors, and could also be subject to the claims of your child’s spouse. If your child or child’s spouse runs into financial trouble, your account could be emptied out overnight. It happens more often than you might think.
Another pitfall with putting a child’s name on your bank account presents itself after your death. Once you have passed away, the bank account now solely belongs to the child in whose name it is listed. If you have multiple children, you may have intended that the one child split the money with each child. But legally, the listed child is not obligated to share anything with anyone.
If your children are young or you don’t have any children, you may have put a sibling or a friend on the account. The same problems are present.
The bottom line is this: putting anyone’s name on your account makes them an immediate owner. Also, what you intend to do with your money is not always exactly what plays out. Before you make such decisions, it is wise to consult with an experienced Estate Planning Attorney who can explain the pros and cons of various strategies, and explore other options that might be better suited to your situation.
Contact the Butler Law Office at 480-921-0626 for a free consultation with an experienced Estate Planning Attorney.