Ask Me Anything "EPISODE 15": Adding Child to Bank Account | Erica EndykeQuestion: Should I add my child to my bank account? Answer: When you add a child to ...
Ask Me Anything "EPISODE 15": Adding Child to Bank Account | Erica Endyke
Question: Should I add my child to my bank account?
Answer: (0:04) When you add a child to an asset like a bank account, they become a joint owner, so yeah, they can access your assets. If they have to manage your affairs, maybe because you can't pay medical bills, pay regular bills, but there are many downsides.
(0:18) First, they can make withdrawals without your consent because they are your co-owner. Also, the money becomes subject to their own creditors, so if they're going through a divorce, your assets could end up in the hands of your ex-son or daughter-in-law.
(0:34) But there are even more drawbacks because if they're applying for financial aid on behalf of an outbound college student, those assets are going to be included. And also, if you wanted to apply for mass health or Medicaid, having that child as a joint owner could block you from eligibility.
Removing a joint owner from an account is really difficult, especially if you're to become incapacitated.
(0:59) So one way we address these concerns is not to add the child to the bank account but instead for you to execute a durable power of attorney naming them as your agent. You authorize them to access the account when they need to, which means that you remain the account owner, and they can then step into your shoes if you're becoming incapacitated to pay your bills but that only works in the short term; what about the long term?
That's why it's a good idea to speak with an estate planning attorney to map up your options for when you are to pass, who's going to manage those assets, how they will get managed, and how they will get distributed.
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