Estate Planning Question: Should you ask your Adult Child Caregiver to be a Joint Signer on a Bank Account?

Should you ask your Adult Child Caregiver to be a joint Signer on a Bank Account?There are some common estate planning strategies that people routinely employ that are so simple and straightforward that people often use them without actually weighing the advantages and disadvantages of the approach. When adult children are providing care for elderly parents, one strategy that is commonly employed to provide easy access to financial resources is to add the child to the parent’s bank account. While the convenience and ease of this approach makes it an attractive option to facilitate a caregiver’s access to funds for a parent’s financial needs, there are drawbacks to this approach that need to be considered. Outlined below, our New Mexico Estate Planning Attorneys have provided an overview of the pros and cons of this estate planning tactic.

Unfettered Access:
If a child is added as a co-signer to the account, the co-signer on the account may use some or all of the funds without the consent or knowledge of the parent. This means that the caregiver can literally empty the account of all funds leaving the elderly parent destitute.

Vulnerability to Creditors:
When an adult child is added as a signer on the account, the funds in the account constitute assets that may be available to the creditors of the child. Under certain circumstances the creditors of a child might elect to levy against the bank account even though no intent existed to transfer any portion of the funds to the adult child. While the child’s name may have been added to the account only for convenience of access, the process of adding an additional signer means that the account is jointly owned so either owner’s judgment creditors can seek to enforce debts against the account.

Exposure to Liability for Personal Injury Judgments:
There is no protection from personal liability if the caregiver who is a co-holder of the account is involved in an automobile accident or otherwise is liable for a personal injury judgment. The personal injury victim might be able to obtain access to the funds in the bank account to satisfy the personal injury judgment.

Convenience of Access:
While the disadvantages above need to be considered, there is no question that simply adding an adult child functioning as a caregiver to the account provides a convenient way to facilitate paying bills, depositing checks and writing checks.

If you are considering joint access to a checking or savings account, there may be better alternative. A durable power of attorney or revocable living trust might permit access to funds without granting joint ownership. This can shield the funds from lawsuits, creditors and misappropriation while still allowing access to the funds for a senior’s care.

If you are considering estate planning strategies, our New Mexico Estate Planning Lawyers at Life Leaf Legal Group, PC offer a free consultation in our centrally located offices in Santa Fe and Albuquerque so that we can discuss your specific situation. Call us today to schedule your free consultation at (505) 856-3591 to learn about your rights and options.

The above information is designed solely to illustrate general principles of law, and does not constitute a specific legal opinion on individual cases. We suggest that you contact experienced legal counsel for a specific opinion tailored to your individual circumstances.

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