Because joint accounts avoid probate and permit easy access to the funds, it is common for a parent to name one or more of their children as a co-owner of their accounts. However, although joint accounts allow a child to pay a parent’s expenses and avoid probate court when the parent dies, they can have unintended consequences that many people do not consider.
A joint account can be at risk to the co-owner’s creditors or a former spouse. If for example, a son or daughter who is added to an account files for bankruptcy or divorce, the account balance could be in jeopardy. Also, what if the son or daughter begins using the account for their own expenses? As a co-owner, that child has full access to the account even for their own bills. Finally, when the parent dies, the child will be the sole owner of the account balance – to the exclusion of any other children. If this wasn’t the intent of the parent, this has the potential to create some real problems amongst the surviving children. A durable power of attorney may be a much better way to make sure your loved ones have access to your finances if you should become disabled. An experienced attorney can discuss your situation and help you decide what is best for you.