Should I Add My Children to My Bank Account?

Estate PlanningEstate Planning

Estate planning can be a complex process when you have children. Many parents intend to leave the majority of their estate, including their bank accounts, to their children. But many are concerned that doing so in their will is not enough to ensure this happens. They also worry that the probate process will cause difficulty and reduce the amount of money their children inherit.

Could putting your child’s name on your bank accounts while you are still alive make for a smoother transition? Can it help you avoid problems once you’re gone?

The answer isn’t simple and whether or not it’s the best option depends on your circumstances.

First, the good news:

Adding your child’s names to your bank accounts now does mean they’ll avoid court proceedings after your death.

But for most families, that’s where the benefits end.

Putting your child as a co-owner on your accounts comes with significant risk. It means your accounts and anything in them are at risk for anything that affects your child in life. For instance, if your child files for bankruptcy or divorces it could affect those accounts. As co-owner of an account, that account would be subject to whatever legal rulings occur.

There’s also a risk directly related to your child. Can you be 100 percent certain that there will never come a time when he or she would be desperate enough to spend the money in the account without permission? Most parents don’t want to think about a scenario such as this. But if you decide to include your child on an account you need to also consider whether or not this could one day pose a risk.

In most cases, attorneys and estate planning experts will warn clients that it’s just too big a risk to add their child, even if he or she will one day inherit the money.

What Are Your Other Options?

Can your family still avoid probate court even if adding your child to your bank account isn’t ideal?

For most people, it is possible to make the probate process less complicated.

First, you’ll want to designate a person you trust as your power of attorney. This should cover both medical and financial decisions, but it doesn’t need to be the same person. The financial power of attorney means someone other than you is designated to make financial decisions and pay your bills in the event you cannot, even if you are still living.

Once that arrangement is in place, you can designate your bank account as “payable on death.” Doing so allows you to remain the sole owner and in control of the account as long as you are living and mentally competent. When this changes, the designation sets up a simple and no-cost way to ensure the money in your accounts becomes the property of your designated heir.

An Estate Planning Attorney Will Help You Create an Arrangement that Works for Your Family

You’ll need to work with an attorney to assign power of attorney and designate an account as payable on death. To do so, you must share your heir’s contact information, birthday, and social security number with your attorney and fill out the payable on death forms from your bank. Make sure you’ve explained your plans to your designated power of attorney and heirs. This way, there is no confusion and he or she knows to step forward when needed.

This is the simplest and least risky way to set up a smooth transition of your bank accounts one you’re gone. Your heirs avoid court costs and fees, and your accounts never become the property of the state. For more information or to discuss your situation with someone who can help you deal with estate planning, contact Frese Whitehead & Anderson, P.A., at 321-984-3300 for more information.


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