Part 1: What could go wrong?
On a regular basis we see clients in the office who have added a person to their bank account. The typical client will mention it almost in passing as we discuss what things the client has in place in case of some illness or loss of mental capabilities. The description is usually something like this: “I took my son into the bank and had them add him on my bank account so he can take care of my bills if I go into the hospital or something.” At first glance that seems like a solid plan. Is it?
Actually, this can be a major problem. To understand why requires a brief step back to analyze the policies on our bank accounts. You see, all our local banks have right of survivorship built in to their bank account policies. That means with any accounts that are jointly owned (2 or more owners), any survivor(s) become the sole owner(s). So, when I hear a client made a son or daughter a joint owner on an account that client owned alone, I know the client has made it so that son or daughter will immediately be the sole owner of that account upon the client’s death (assuming the son or daughter outlives the parent).
Look for my next blog entry on options available to authorize a person to access your account without creating another owner.