Florida parents may add their children’s names onto their bank accounts so that they might write checks on their behalf and so on. Parents might see the adding of their children’s names onto their bank accounts as harmless moves, but they can come with numerous unforeseen consequences. The financial consequences can be negative for the parents as well as the children.
One of the consequences of adding a child’s name to a bank account is gift taxes. Adding a child’s name with rights of survivorship in the estate planning process gives the child the same rights and responsibilities on the account as the parent. Even if the parent didn’t intend the account to be a gift to their child, the IRS still requires gift taxes to be paid on it. The parent and the child could also share liabilities. For example, if a creditor levies a judgment against the child, then the account that the child shares with their parents could be garnished, even though the parents had nothing to do with the liability.
Moreover, if the child goes through a divorce, then the account that they’re a joint owner of with their parents is subject to be divided during the divorce. Additionally, adding one child onto a parent’s account can override a parent’s will. For example, a parent’s will may clearly state that all assets are to be divided equally among siblings. However, if the parent added one child onto their account, then that child’s rights-of-survivorship on the joint account supersede the will.
Parents who want to ensure that their wills are carried out exactly as they wish might benefit from the seeking the counsel of a probate lawyer. A probate lawyers might be able to help them by ensuring that they plan their estates in a manner that ensures that their property will be divided as they wish.
Source: Forbes, “Never Add Your Child’s Name To Your Bank Account, Here’s Why“, Eve Kaplan, August 06, 2013