A common question I receive from clients is whether a parent should make a child a joint owner of a bank account. Generally, the question comes from an elderly single or widowed client who either already needs the assistance of a child to ensure that bills are paid or is concerned that should she experience a debilitating health event, her child has the ability to pay bills.
Generally, I advise against this arrangement. There are two primary reasons for my position.
- Making a child the joint owner of an account means that the child now has as much ownership of the account as you do. If the child is sued or decides to drain your account, you could lose your funds.
- Upon death, the child becomes the owner of the account. If you have other wishes for your funds upon your death, leaving the funds to all three of your children equally for example, those wishes will be trumped by the joint ownership.
So what advise do I give clients so that their child has the ability to pay bills without the risks I outline above?
I advise that the client consider executing a financial power of attorney to give the child the ability to manage financial assets. With this arrangement, the child can ensure that bills are paid, and other financial matters are managed, and will do so without assuming any ownership of any assets and without disrupting estate planning wishes.
For more information on joint ownership of accounts and the financial power of attorney, contact a Cleveland estate planning lawyer.