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.
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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.