7 Things You Need To Know About Adding Someone To Your Bank Accounts

Many senior citizens have the desire to add someone to their bank account to help them with their finances should they ever be in need. There are, however, several unintended consequences associated with adding someone to your account that you should be aware of.

  1. When you add someone as a joint owner on your bank account, the money in that account becomes just as much their money as it is your money. Several times each month, after something bad has happened to someone, I hear “but I can prove that every penny put into that account came from my social security check. The person I added didn’t put any money in that account.” Unfortunately, that doesn’t matter and there are no exceptions. When you make someone a joint owner of anything, they have equal rights to that item regardless of whether or not they contributed to it.
  1. Upon your death, the joint owner on your account owns the account outright regardless of what your Last Will and Testament says. The final wishes in your Will are not applicable to bank accounts that are jointly owned, regardless of what your Will says. Upon one joint owner’s death, the other joint owner becomes the sole owner of the account.
  1. The joint owner’s creditors will be able to garnish your bank account, because your money is now also the joint owner’s money. Most of the time when people are adding someone else to their bank account, they do not conduct a credit check prior to doing so. This situation can be extremely heartbreaking. If your joint owner has delinquent child support or alimony obligations, past due taxes or other financial problems then your bank account is at risk. If your joint owner is sued, either before or after you add them to your bank account, your bank account can also be used to satisfy any judgment that is entered against the joint owner. To make matters worse, if every dollar in your account is suddenly taken to pay for joint owner’s debt, you have no recourse against the joint owner given that the money in the account equally belongs to the joint owner.
  1. The fact that your joint owner is your child does not make these unintended consequences less likely to happen. Even if your child is the most financially responsible person you have ever known, bad things can still happen to good people. Your child could be at-fault for a car accident and be sued for an amount that is over and above their insurance limits. Your child could also suddenly become ill and start accruing a massive amount of medical debt. We never know what curveballs life may throw at us. All we can do is try to lessen the consequences of those curveballs in advance.
  1. The joint owner can withdraw every penny in your account at any point, while you are living or deceased, and there is nothing you can do about it.
  1. Once you add someone to your bank account, you cannot remove them as a joint owner without their written consent. The joint owner will have to sign the removal documents at the bank before the bank will remove them from the account. So, if you now want to take someone’s name off of your account, you need to make them aware of it and make sure they go to the bank to sign the proper documents.
  1. There is a better option. If you are concerned that you will need help managing your finances or paying your bills one day, then you need a Power of Attorney not a joint owner. A Power of Attorney can do all of the things you want the joint owner to do, but the money in your account never becomes the Power of Attorney’s money. As such, you do not have to worry about any of the things mentioned here happening.

About the Author

Amanda Jelks is licensed to practice law in Tennessee and Georgia. Her firm, Jelks Law PLLC, focuses primarily on legal issues that affect businesses and estates. Jelks Law was selected as the 2018 Emerging Business of the Year by the Urban League of Chattanooga. Amanda has been chosen as a Rising Star by Super Laywers® for the last three years in a row. This award is given to less than 2.5% of attorneys in the mid-south who are under the age of 40 or have been practicing for less than 10 years. Schedule a time to speak with Amanda today.