If you are considering adding your adult child’s name to your bank account, you should consider the risks associated with doing so. Although it may be convenient and easy to accomplish, placing your adult child’s name on your bank account is not a recommended practice. The person you add to your account is presumed to be the joint owner of the account. If she encounters financial problems, her creditors can seek to freeze or to attach the account, jeopardizing your access to the funds in the account. As a joint owner of the account, the person you add to your account is authorized to use the funds in your account for her own purposes. Upon your death, the person named on your account is entitled to the remaining funds in the account, even if your will divides your assets equally among all of your children.
The better course of action is to appoint your child as your financial power of attorney. A financial power of attorney gives the person you name as your agent the ability to assist you in handling your finances. When you appoint an agent to serve as your financial power of attorney, state law requires your agent to take actions only in your best interests. Failure to do has significant legal consequences. Appointing an agent through a financial power of attorney has the added benefit of permitting you to limit the extent of authority you are providing to your agent. Appointing an agent through a financial power of attorney can be accomplished quickly, with little expense, and can provide significantly more protection than adding your child’s name to your bank account.
For more information or if you have questions contact our Trusts and Estates Group, Darcie P.L. Beaudin, Bryan M. Dench, or Jill A. Checkoway