Often times I encounter families who have added their adult child on their bank account for “ease of access” in case the child needs to get to funds quickly after mom or dad pass away. When I come across families who have done this, I advise them to remove this child from the account. Why? Adding the child to the account opens up the flood gate of liability to the account. For example, if the child were to get sued, the child’s creditors could come forth and attach a claim against this account; if the child was in the middle of a divorce, the soon to be ex-spouse could attempt to claim a right to this account during the divorce proceedings.
If mom and dad had a Revocable Living Trust, they could add the adult child as trustee to their account. By doing so, the adult child would have access to this account just as mom and dad do; however, not as an owner, but rather as a trustee to manage the account. There would be no liability issue in this case because the adult child is not the owner of the account.
Typically an adult child is added onto their parent’s account as a trustee in a few scenarios. First, when the parent’s health condition is limiting their ability to manage their assets, pay bills, etc. And second, when one parent passes away and the surviving parent has never managed the assets, never paid the bills and doesn’t feel comfortable in going forward alone as trustee.
Before changing the status of your account(s), you should sit down with an experienced estate planning attorney for a comprehensive review of your plan.
About Morris Hall:
At Morris Hall, we have focused our legal practice on estate planning for over 40 years. Along with estate planning, our attorneys help clients and their families with matters of probate, trust administration, wills, power of attorneys, business planning, succession planning, legacy planning, charitable gifting and other important legal aspects. We also have divisions in financial, real estate and accounting to help you incorporate all of your planning together, ensuring that everything works perfectly for your needs and situation. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Cave Creek, Tucson, Prescott, Flagstaff and Arrowhead. Contact us today at 888.222.1328 to schedule an appointment!
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.
- What the Proposed Treasury Regulations Mean for Deductions Under Internal Revenue Code Section 2053 - September 16, 2022
- Does Your Estate Have Sufficient Liquidity? - September 14, 2022
- Understanding Asset Protection Trusts - September 12, 2022
Leave a Reply