In these uncertain times, many are exploring ways to help their loved ones ensure safety and security. Adding a child to a bank account might seem like the perfect solution to safeguarding an elderly parent’s finances. Once added to the account as joint owner, the child can help with bill paying, and can monitor the account balance to control double payments or excessive gifts. When the parent dies, the account passes to the surviving joint owner without requiring probate.
But there are down sides to adding a joint owner to a bank account that should be considered, and too often aren’t. If the child added to the account has financial problems, the child’s creditors can access the funds in mom’s or dad’s account to satisfy the child’s debt. In that circumstance, the decision to add a child to the account to make it easier to protect the parent’s money can result in the loss of the entire account.
Another down side to adding a joint owner that is often not considered is what happens when mom or dad dies if there are other children. Under Georgia law, the child on the account as joint owner receives one hundred percent of the account. Even if the parent has left a Will leaving everything equally to all the children, the other children will not receive a share of the joint account. Of course, the child who receives the account is free to split the funds with the other children, but there is no legal requirement to do so. If the joint owner chooses to keep all the funds, the decision to add that child to the account caused the other children to be disinherited and undid the parent’s intended estate plan.
If the risks to adding a child to the account as joint owner outweigh the benefits, there is another solution. The parent can execute a Power of Attorney. Georgia’s 2017 statutory power of attorney form includes provisions authorizing an agent to pay bills and manage bank accounts.
A properly executed Georgia Power of Attorney can accomplish the goal of safeguarding mom’s or dad’s account, without the possible legal risks.
Do you need to update your estate planning to ensure you have the proper documents to suit your needs? Reach out to schedule an appointment with our expert Estate Planning Attorneys. Call us at (770) 817-4999 or click here to send us a message.