My plan is good, I put a child on my account.

I continue to meet with clients who wish to avoid probate and make sure a child has access to money after their death to pay bills and expenses. My counsel is still the same: this is not recommended. It may be efficient, and it may avoid probate, but more often than not, issues arise that put the client’s entire plan at risk.

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

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.

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, so died, too. Sally’s surviving husband decided to keep the assets and never gave any to Tommy’s other children.

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. This will give them full authority to assist you, but they will do so without ever being the owners of any of your accounts. Then, discuss how to make sure your plan for your legacy can be carried out without probate (if advised). Call us today for an appointment to discuss your estate planning needs.