Maybe it seems like common sense to be adding your child to your bank account, so they can help pay bills. This can be convenient, but people often don’t realize that the child will have more authority than to just sign checks. Adding your child to your bank account means that the bank would let them withdraw the entire account and that they might eventually own 100% of it when you pass away. Also, the bank account could be lost to the child’s debts or even a future divorce. As a Greensboro estate planning attorney, I have seen this cause problems within families, and it is a hotly litigated issue. Families sometimes must go to court to contest joint ownership of accounts, letting the North Carolina courts decide who gets the funds.
On one side, you have the heirs arguing that the balance of the account belongs to the estate. On the other, the co-owner of the account claims right of survivorship and that no funds belong to the estate.
The best way you can avoid litigation over joint bank accounts is with proper trust funding. Generally, a living trust is a better way of ensuring your intended beneficiaries receive your estate. We recommend that our clients fund their accounts in the name of their trust. That way, their trustee or co-trustee can pay bills on their behalf.
Another strategy to prevent litigation over joint bank accounts is by using a well-drafted Durable Power of Attorney. This allows another person to access your accounts and to pay bills on your behalf without actually being an owner of the account.
It is easy enough to prevent litigation such as this by working with an experienced estate planning attorney. If you are thinking of adding your child to your account, call our Greensboro estate planning law firm first at (336) 378-1122 and schedule a consultation. We can help you find the safest way to accomplish your goals and plan for the future.