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Horizon Elder Law & Estate Planning Blog

Thursday, May 28, 2020

Should My Aging Parents Add Me to Their Bank Accounts?

If you are thinking about getting added to your aging parents’ bank accounts, you should realize and understand the risks. It is not automatically an unwise decision to get added to your parents’ accounts, but sometimes people experience adverse outcomes they did not anticipate.

It might seem convenient to have a joint bank account if you help your parents manage their finances. You might be able to accomplish the same goals through less risky alternatives. A California elder law attorney can explain your options and help you and your parents craft an estate plan.

Possible Consequences to the Adult Children and the Aging Parents

The money in the bank account will count as an asset for both the parents and the adult child. This fact could result in:

  • Joint accounts can create tax consequences for either the parents or the adult child. All the account owners could have to declare earnings on the account.
  • The adult child might embezzle from the bank account, either a little or the entire balance.
  • Other siblings can get disinherited if the account gives a right of survivorship after one or more account holders die. In that event, the account will transfer by operation of law at the moment of death, which means that the remaining funds will not be part of the estate and will not get distributed through the will or living trust of the parent.
  • The money in the account could get tied up if the adult child goes through a divorce. The adult child will have to identify all bank accounts, including joint accounts. The adult child’s spouse might try to take part of the account funds through the divorce.
  • The adult child’s spouse might use a power of attorney to access the funds in the joint account. This scenario can happen when the adult child’s power of attorney authorizes the spouse to act on their behalf.
  • The adult child or parents might no longer qualify for needed financial assistance, like Medicaid or other government programs. Since Medicaid helps millions of seniors pay their nursing home expenses, losing eligibility for this benefit could be devastating. If the adult child became disabled and needed public assistance, she might be ineligible because of the joint account.
  • The adult child might be ineligible for financial aid for his or her child going to college (the grandchild of the aging parents). The joint account can count as an asset of the adult child.
  • Creditors could garnish the bank account for unpaid debts of the aging parents or the adult child. The adult child might be financially responsible and have an excellent credit score. Still, a sudden financial setback, like a car accident that ended up in a massive judgment against the adult child, could wipe out the joint bank account.

A durable power of attorney can give you the legal right to handle your parents’ financial matters without the possible fallout from having a joint account with them. Contact us today. Our California elder law attorneys can advise you on additional options, like a living trust, and draft the documents you and your parents need.


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