One of the most common things we see with our clients is having joint owners on a bank account, such as an adult child, for convenience to the “actual” owner (you).
Many people, with the willing assistance of their helpful bank, have added a close family member (other than a spouse) to their checking or other accounts, with the thought that, “If I’m in an accident and stuck in the hospital, my child can help make sure my bills get paid or get money out for me if I need it.”
This seems like a pretty good idea: planning ahead, trying to make a disastrous situation less so, right? And the bank is more than willing to help you do it, so people must do this all the time, right?
Well, sure, it seems like a reasonable course of action. After all, the person you have chosen to add to your bank account is naturally the person you trust to help you, and is the person most available to assist you in a time of need. It’s understandable WHY people do this.
We hate to be the bearer of bad news. Really, we do. But this is a bad idea.
In the eyes of the law, you have gifted YOUR asset to this other person. In reality, a reasonable person can see that you did not intend to do that, but the law sees it differently.
If your co-owner runs into legal issues, such as a bankruptcy, divorce, creditor problems, etc., you have invited THEIR financial problems into YOUR financial world.
In addition to the myriad reasons how this DIY planning can hurt you, there is a great little tool that allows you to reach the same objective, without exposing your assets to the risks discussed above.
Stay tuned to a future discussion of the great alternative to learn more, or feel free to call us if you want to find out sooner! We know MANY of you reading this have joint owners on your accounts. No judgment, we promise, but let’s work on cleaning this up so you can accomplish your goals the right way!