In Tennessee Should You Add Your Children to Your Bank Accounts When You Need Assistance Later in Life?

A troubling amount of elderly individuals in Tennessee add one or more of their children to their bank accounts as joint owners with right of survivorship in order to have them assist in paying bills and taking care of other matters late in life.  This is certainly a tempting option because it can be a simple way to allow someone to help an elderly individual late in life so their financial matters are taken care of by someone.  However doing this is fraught with danger.

When an individual is added to a bank account with right of survivorship, then upon the elderly individuals passing, the entire account passes to them pursuant to the right of survivorship terms.  This can cause an unequal distribution of assets among children for instance (even if the will clearly states that everything should be split between your children equally, this money in the account passes outside of that requirement). 

Another major problem is if the “co-owner” on your account obtains a judgment against them by a creditor then the creditor can often collect against your account.  This is a significant risk.  For instance, if one of your children gets into an automobile accident and unfortunately severely injures someone but they have insufficient insurance coverage to pay for the damages, then the injured party could obtain a judgment against them and execute against your account to pay the judgment. 

Additionally, the account will be considered part of your child’s assets for purposes of bankruptcy or other purposes.  As a result, there is a tremendous risk in adding even responsible, financially stable individuals as owners of your bank account.  I recommend doing this in almost all circumstances because the downside consequences are so significant.  There are other options like having a properly completed Power of Attorney completed that will allow your children to assist you with your finances later in life.  Also, if you are trying to avoid probate for those accounts, then you can list them as a Pay on Death (POD) or Transfer on Death (TOD) beneficiary on the account.  Regardless, when making these decisions, you need to consult a Tennessee estate planning attorney to assist you further so that you have the best advice to avoid the pitfalls that are present.