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Should I Put My Children on My Accounts?

November 13, 2013 by Morris Hall, PLLC Leave a Comment

A trust is a powerful document and has many great features. I’d like to speak about one feature of a trust that has come up several times with my clients over the last few weeks.

When someone creates a trust, that person is referred to as the Trustor. The person who manages the assets within the trust is called the Trustee. It is not uncommon for the Trustor and the Trustee to be the same person. Typically, when a husband and wife create a trust, both of them act as the Trustors and the Trustees of the trust. While both spouses are alive and while they have capacity, they can continue to manage their trust assets almost as if nothing ever changed. The only difference is that the trust owns the assets while the Trustees manage the assets for their own benefit.

But what happens if the Trustee(s) can no longer manage the trust assets? Imagine a scenario where your mother and/or father are increasing in age and, with each year that goes by, it becomes more and more difficult for them to perform functions that used to be very simple: going to the bank by themselves, writing their own checks, filing their taxes, making basic health care decisions, etc. Unfortunately, this happens very often and it can happen very quickly in some cases.

One proposed solution to that problem is for the parent to place his or her child(ren) on the bank account so that the child(ren) can handle those banking transactions. Seems like a good idea, right? While this scenario does work, in the sense that it allows the child access to the parent’s funds, it creates a greater problem of liability and risk. When a child is placed as a joint tenant on a bank account, those funds are treated as though they belong 100% to the child now, too – not just 100% owned by the parent. This causes major issues when the child has creditors, goes through bankruptcy, or gets a divorce. The parent’s funds are now at risk of being lost.

So that brings us to a much better solution: a trust. The beauty of a trust rests in that anyone in the world can be named the Trustee of the trust assets, and there is no longer the assumption of risk that is typically associated with an asset held in joint tenancy. (Of course there can be issues that arise with the Trustee, but that is a topic for another day.) The Trustee has a fiduciary duty to the Trustor to take care of the assets and provide for the needs of the Trustor. This is the perfect situation for a parent that can no longer manage his bank account because he can appoint his daughter to serve a Trustee on the trust, and thus, be able to handle all the financial affairs that go along with that particular asset. If the daughter were to ever be sued, there would be risk of losing the funds in her father’s bank account because the daughter was only managing the assets; the daughter never owned the assets.

A trust provides for a seamless transfer of the ability to manage assets for someone who cannot do it themselves. If you can imagine a scenario where this would be beneficial to you or to anyone else in your family, please give our office a call so we discuss if a trust is the best solution for your circumstances.

Morris Hall Can Protect You in Today’s Litigious Society:
We live in a litigious society, where over 1 million lawsuits are filed every year in America alone.  Financial predators are looking for ways to take funds from others and often use litigation as their means to do so.  At Morris Hall we provide your assets and your loved ones with important protections that can prevent financial predators from taking advantage of you.  We do this through proper and current estate planning techniques.  With an MH living trust, we can also protect your property, assets and loved ones from probate, estate taxes, gift taxes, creditors, Medicaid spend-down, conservatorship or guardianship proceedings, ex-spouses and more.  A living trust also keeps your asset and beneficiary information private and secure to avoid giving financial predators information to use against you and your family.  Without a living trust, this information will be made public.  For those living in Arizona, we serve the areas of Phoenix, Mesa, Gilbert, Fountain Hills, Scottsdale, Cave Creek, Prescott, Flagstaff, Sedona, Tucson, Sonoita, Arrowhead, Avondale, Goodyear and Tempe.  In we serve the areas of , , Rio Rancho, White Rock, Alamogordo, Truth or Consequences and more.  Contact us today at 888.222.1328 to schedule an appointment with an attorney in your area!

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.

 

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Morris Hall, PLLC
Morris Hall, PLLC
Company at Morris Hall, PLLC
For more than five decades, Morris Hall has been providing quality estate planning legal services for its clients seeking opportunities to preserve wealth and assets through estate preservation plans.

In fact, estate planning, asset preservation and probate law have been our only areas of practice. We are proud to have helped thousands of individuals of all levels of wealth and assets, people concerned about protecting their families from the devastating legal and financial effects of disability and death.
Morris Hall, PLLC
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