Clients First
It’s not just a motto;
it’s the guiding principle of our law practice.
Clients First
It’s not just a motto; it’s the guiding principle of our law practice.

I’m thinking about all the times I’ve had older clients tell me a banker advised them, “Just put your son or daughter’s name on the account. Then they can write checks to pay your bills if you need help with that. And after you die, there will be no need for probate.”

Your banker is trying to be helpful, but not being a lawyer, the banker likely doesn’t know about the risks and legal consequences of the advice he or she is giving. In most cases, there will be a better way to get your son or daughter’s help and avoid probate. Let’s first look at some of the risks involved with joint ownership.

Lifetime Risks

Even though all of the money in the account came from you, if you put your son or daughter’s name on the account as a joint owner, he or she immediately has access to any money in the account. I’m not suggesting that your child would betray your trust and take your money. However, consider these possibilities:

  • What if they were the victim of identity theft?
  • What if they had a financial catastrophe and their creditors demanded information about all accounts in their name?
  • What if they became incapacitated and had a guardian appointed for them and the guardian demanded access to any funds in accounts titled to them?

These and other situations could put your money at risk. In addition, putting another person’s name on your bank account as a joint owner can create problems if you ever need to apply for Medicaid benefits to pay for long-term care.

Risks After You Die

As the person at the bank may have told you, the joint account avoids the need for probate of the account. Depending upon how the joint account is set up, the co-owner will typically become the sole owner of all of the funds upon your death.

However, this may not be the best result. If the co-owner is one of your children, you may have other children you intend that the funds be shared with. You may hope the co-owner shares the funds with his or her siblings, but they may be unable to as a result of creditor problems, divorce or disability. And if, after you die, your children get into a disagreement, the child who has the money from your account will have an advantage over the others, and might even refuse to share the money as you intended. If you want to avoid the need for probate administration of a bank account, there are other, less risky ways to do so and also protect your plans for the money.

Avoid Following Legal Advice from Non-Lawyers

Only a lawyer can properly advise you on the advantages, disadvantages and risks of retitling your assets. Following the advice of bankers or other non-lawyers, no matter how well-intentioned, can result in things turning out in a way you would never have wanted, and that you could have avoided if you knew all the legal implications.

If you have questions about the best way to accomplish your estate planning objectives, please call us at 715-845-1805 to set up a consultation at our Wausau or Stratford office.