At AmeriEstate Legal Plan, we often hear from clients who believe that adding their children to their financial accounts is a simple and cost-effective way to manage their assets. Banks frequently suggest this approach, and it might seem like a logical and convenient solution. However, the reality is that this decision can lead to significant legal and financial pitfalls.
Adding a child to your bank account is undeniably convenient. It allows them to manage your finances easily, especially if you become incapacitated or need assistance with your day-to-day banking tasks. However, this convenience comes at a high cost.
When you add a child to your bank account, they become a legal owner of the funds. This means they have the same rights to the money as you do. In the eyes of the law, there is no such thing as “only for convenience.”
One of the most alarming consequences of this decision is the exposure to your child's creditors. For instance, there was a client who faced a distressing situation where money was being withdrawn from her account by law enforcement. Her child had fallen behind on child support payments, and the courts discovered their name on her account, leading to an order to seize funds. Resolving this issue was not easy.
Adding a child to your house deed might seem like a straightforward solution, but it carries its own set of complications.
Your child now co-owns your home, which means their creditors can place liens on the property. This can put your home at risk if your child encounters financial difficulties. This also means that you cannot sell your home without their consent.
Transferring ownership can also trigger a reassessment of property taxes, potentially leading to higher tax bills.
Perhaps the most significant issue arises when you have more than one child. By adding one child to your financial accounts or property deeds, you risk creating an unequal distribution of your assets. While you might trust your child to share with their siblings, legally, they are under no obligation to do so. Sadly, it's not uncommon for disputes to arise among siblings after a parent passes away, leaving those not named on the accounts with little recourse.
At AmeriEstate Legal Plan, we believe in finding the best solutions for your estate planning needs. Instead of adding children to your financial accounts or property deeds, consider alternatives such as creating a trust. A trust can provide the convenience you seek while protecting your assets from creditors and ensuring an equitable distribution among your heirs.
If you have any questions or need assistance with your estate planning, please don't hesitate to reach out to us. We're here to help you navigate these complex decisions and safeguard your financial future.
