frequently asked questions

Should I add my child to my bank account?

Why you should not add your child to your bank account.

The way bank accounts are set up is dictated by your agreement with the bank, but most banks set up accounts similarly. If you have more than one person on the account, it is usually set up as joint tenants with rights of survivorship (JTWRS). This means that both people whose names are on the account are owners of the account. When you add a child to an account, they are typically made a co-owner of the account with rights of survivorship.

The first reason this is typically not recommended is that the child can withdraw funds from the account for purposes that do not benefit you. You may need those funds, but the child can wipe out your account leaving you nothing when you really need the funds to survive on.

The second reason this is typically not recommended is that the child whose name is on the account will own the entire account, to the exclusion of other children, beneficiaries, or heirs, after you die. You may trust that the child on the account will share the balance of the account with other children, beneficiaries, or heirs but they are under no obligation to do so and oftentimes do not. Because the right of survivorship keeps the funds out of probate, the other children, beneficiaries, or heirs may not even know or be able to find out about the account.

You may think you trust your child and that adding them to your account will make it easier for them to help you pay bills or manage your accounts. However, there are better ways to accomplish that. I am writing this article because this problem comes up frequently. One better way of dealing with this is to make your child an authorized agent or co-signer on your account without making them a co-owner with rights of survivorship. Another better way of dealing with this is to grant power of attorney to the child allowing them to handle banking transactions without making them an owner or giving them rights of survivorship. With either of these better options, you can even ask the bank to add a payable on death (POD or TOD) designation to all children, beneficiaries, or heirs that you want to inherit the funds in your account.

These are just a few reasons why you should consider not adding a child to your bank account. However, this is a very basic article and there are many other scenarios that may determine the best practices for bank accounts.

If you need help planning and avoiding costly mistakes in your estate, contact the Law Office of Roy Neal Linnartz, PLLC at 830-625-9300.