No problem putting a child on my account, right?

It is not uncommon for a parent to add a child to their financial account to give that child immediate access to funds to help pay bills, or for making payments after the parent’s death. Although having a child on the account may be efficient, it is not always helpful and more often than not actually causes the parent’s estate plan to not properly be carried out.

Here are 3 examples of times a child as a joint owner on an account has caused problems:

1. Jane Doe wanted to leave her estate to her 3 children equally. Her oldest son, Johnny, lived near her and helped with her finances, so Jane added Johnny to all her financial accounts so that he “would be able to help manage finances and pay bills.” Jane died and all her accounts went to Johnny, not equal to all kids. Johnny did not want to make a gift to his siblings, so Jane’s plans were not carried out.

2. Tommy Smith needed help with his finances. He added his youngest daughter, Sally, to all his accounts and as beneficiary on all his life insurance policies. He didn’t want to pay a lawyer for a “fancy estate plan when Sally can just get everything and divide it among her other five siblings.” Tommy died and all his assets went to Sally. Tragically, before Sally could make any gifts, she died, too. Sally’s surviving husband decided to keep the assets and never gave any to Tommy’s other children.

3. Delores Dolittle added her son, Dr. D.J. Dolittle, to her accounts, so that he could help her with her bills and other financial matters. Unfortunately, Dr. Dolittle was named in a lawsuit, which he lost. His creditors came looking for his assets to make them whole. The good doctor’s assets now included all of the accounts he shared with his mother. Delores’ nest egg was in jeopardy because Dr. Dolittle was an owner on those accounts.

What is a better way? Create comprehensive financial power of attorney documents, naming your child as your agent. This will give them full authority to assist you, but they will do so without ever being the owners of any of your accounts. Call us today for an appointment to discuss your estate planning needs.

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