5 Big Risks of Adding Your Kids to Your Bank Account

by | Nov 15, 2023 | Elder Care Advising, Estate Planning

The Truth About Adding Your Child(ren) to Your Bank Account

Many parents think that “adding their children to their bank account” is an easy way to be sure their kids can help if something unexpected happens, but it can cause some unintended consequences. Legally, you are naming a child as a joint owner of the account.

Adding your child as a joint owner could create unforeseen problems for both yourself and your child in the future. Despite friends or bankers telling you it’s a good idea, this sort of “coffee shop” legal advice can cause big problems down the road.

Adding your child(ren) as a joint owner of your bank account may seem like a good idea to ensure that bills and other financial responsibilities can be handled in case of an emergency. However, it is crucial to understand the potential problems that come with this decision. Therefore, it is essential to weigh the pros and cons and consider alternative options before deciding.

5 Risks of “Simply” Adding Your Child to Your Bank Account

There are many potential issues that could come up later if you add your child to your bank account now. Here are just a few to think about:

  1. If you die, the child on the account gets all the money in the account. This can be a real problem if there are several children in your family, but you only named one of them on the account. Even if you intended for all the children to share the money upon your death, legally, the money belongs to the child whose name is on the account.
  2. If the child on your account gets sued or divorced, YOUR money in your bank account could be at risk.
  3. If your child becomes disabled (through a car accident or a stroke) after you are already disabled, then their spouse will gain control of the account and your money.
  4. If creditors come after your child, they could come after YOUR money in the “joint account.”
  5. If your child is on the account as a joint owner, then they have every legal right to come and take ALL the money from the account anytime they want. And there is little you could do legally to stop them from doing so. You’re probably thinking, “My child would NEVER do that.” But money makes people do strange things. We see it nearly every day.

Two Solutions That Can Prevent Future Problems

1. Power of Attorney

If you want a child to be able to pay your bills if you are sick, then name them a Power of Attorney instead of adding them as a joint owner of your bank account.

2. Payable Upon Death

If you want your money to go to your child or children at death, use a payable-on-death designation or give instructions in your will or trust.

Experienced Estate Planning and Elder Law Attorneys Can Help

Ultimately, it is important to find solutions that achieve your goals without creating unforeseen issues. This is why it’s crucial to have the help and advice of an experienced estate planning and elder law attorney. Attorneys use legal tools like Powers of Attorney, trusts, wills, and payable-upon-death designations to make sure things go smoothly upon death or disability.

The most effective attorneys can help you solve problems without causing extra stress, and they should be able to anticipate the potential problems that your current actions may cause and prevent them through the use of legal solutions.

To continue learning more on the topic, download one of our free reports, 12 Reasons Not to Give Your Property or Your Money to Your Kids Right Now, or 5 Big Risks of Adding Your Children to Your Bank Account. We also offer free monthly workshops for the community. You can find upcoming dates for those workshops here or give us a call at 217-726-9200 to save yourself a spot.