• Neahmia Brunner

Should You Add Your Child as a Joint-Owner of Your Bank Account?

Updated: May 18

Adding your child as a joint-owner to your bank account may seem like a good idea as you start to require assistance managing your finances, but it may come with some unintended consequences.

Finances jointly owned with a child.

Most banks set up joint accounts with "right of survivorship" meaning that when a co-owner of the account dies, the other will automatically become the sole owner of the account. This could potentially cause a number of issues regarding the estate of the deceased.


If you had planned to distribute everything to your kids equally, it may come as a surprise that the right of survivorship can supersede will instructions. The financial asset held in joint-ownership will avoid probate altogether and cannot then be distributed according to your wishes. While the child who gained control of the asset may choose to carry out equal distribution of the funds, they are not legally required to do so. In such a scenario, the personal representative listed in your will may not have sufficient funds to fulfill the wishes of your estate. If the child does in good conscience carry out the distributions as planned, they may be subject to a gift tax in doing so.


Another unintended consequence of adding your child as joint-owner to your account is foregoing several protections to your assets. If your child assumes large debts while in joint-ownership of your account their creditors can claim against the account for those debts. A child's spouse may also claim against the account in the event of divorce. The same implications may apply if a lawsuit is awarded against your child.


One problem we avoid thinking about all together is the opportunity for your child to use any jointly held funds at their discretion. While enlisting them as a joint-owner signifies a high level of trust, mental illness, addictions or desperation could drive your child to do the unthinkable- like draining your account.


While these are worst-case scenarios, effective planning is a great risk management tool. Fortunately, there is a simple solution allowing your child the authority to assist you in finance management without the additional risk. A well-crafted Power of Attorney makes your child a financial agent, and allows you to determine the powers that they are able to exercise on your behalf.


For more information or to seek counsel in drafting a Financial Power of Attorney, contact us today at Gage-Michaels Law Firm.


Disclaimer: This blog post is made available for educational purposes only. It should not be relied upon for legal or tax advice and is not a substitute for legal research or a consultation with a qualified attorney.