Twin Cities Probate Lawyer Weighs in on Whether to Add Your Child to Your Bank Accounts to Avoid Probate
Individuals engaged in estate planning often get panicky when they hear the word “probate.” When the term hasn’t been fully explained by a probate lawyer (and sometimes even when it has), it conjures visions of long waits, loss of inheritance, and many other hassles for heirs of an estate.
To calm these fears (and to avoid working with an attorney), many people consider the idea of adding one or more of their children to their bank accounts. Generally speaking, each “joint tenant” of an account has complete access to the money, but when one dies, the entire amount becomes the property of the other joint tenant(s).
This may seem like a logical way to directly transfer money to heirs without going through the probate process, but a skilled probate attorney in the Minneapolis / St. Paul metro area needs to keep clients informed of potential pitfalls of this approach:
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As it has already been mentioned, all joint tenants have access to the funds in the account. This means that either party can withdraw money at any time. If the child added to the account is not entirely trustworthy, this can be a devastating reality when the money is used inappropriately.
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In a case where the parent passes away, any money received by the child can be considered a gift, which means that it is subject to a variety of laws and may be taxed. An Twin Cities estate tax attorney will be able to keep you up-to-date on current laws and regulations in our area.
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Creditors for both parties can have access to this account. That means that if one joint tenant dies (even the one who is not in debt), the other’s creditors can go after the money they jointly held. Keep in mind that this means that if the child has had credit problems, those creditors may have access to the parent’s money.
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Money left in the event of the parent’s death will only be accessible to the other named tenant(s). If one child has been responsible for the majority of a parent’s elder care and therefore is on the account, he or she will likely have no legal responsibility to share those funds with other siblings. Again, trustworthiness is an important issue.
If you are considering adding a loved one to a bank account as a means to avoid probate, it’s important to at least talk to a knowlegable probate attorney about your options. You may find that simply giving your loved one power of attorney over the account or holding your assets in trust may be more preferable based on your circumstances.
To get the information you need, please feel to give our Minneapolis area probate law firm a call at 763-231-7884 and ask to schedule a consultation at no cost to you. During this comprehensive session, we can help you determine the best methods for protecting your assets if death or disability should occur.