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Modern Estate Planning Blog

Elder Law & Special Needs Planning

Sacramento Probate Lawyer Weighs in on Whether to Add Your Child to Your Bank Accounts to Avoid Probate

July 29, 2011

The word “probate” often conjures visions of lawyers, long waits, loss of inheritance, and many other hassles for heirs of an estate.

To calm these fears (and to avoid working with an attorney), many people consider the idea of adding one or more of their children to their bank accounts. Generally speaking, each “joint tenant” of an account has complete access to the money, but when one dies, the entire amount becomes the property of the other joint tenant(s).

This may seem like a logical way to directly transfer money to heirs without going through the probate process, but there are some very undesirable drawbacks. As a skilled probate attorney in Sacramento I’d like to clarify some of the potential pitfalls of this approach:

  • As it has already been mentioned, all joint tenants have access to the funds in the account. This means that either party can withdraw money at any time. If the child added to the account is not entirely trustworthy, this can be a devastating reality when the money is used inappropriately.
  • In a case where the parent passes away, any money received by the child can be considered a gift, which means that it is subject to a variety of laws and may be taxed. A Sacramento estate tax attorney will be able to keep you up-to-date on current laws and regulations in our area.
  • Creditors for both parent and child can have access to this account. That means that if one joint tenant dies (even the one who is not in debt), the other’s creditors can go after the money they jointly held. This is true while all parties are alive as well. Keep in mind that this means that if the child has had credit problems, those creditors may have access to the parent’s money.
  • Money left in the event of the parent’s death will only be accessible to the other named tenant(s). If one child is on the account, he or she has no legal responsibility to share those funds with other siblings. Again, trustworthiness is an important issue.

If you are considering adding a loved one to a bank account as a means to avoid probate, it’s important to at least talk to a Sacramento probate attorney about your options. You may find that giving your loved one power of attorney over the account or holding your assets in trust may be more desirable and beneficial based on your circumstances.

To get the information you need, please feel to give our Sacramento probate law firm a call at (916) 241-9661 and ask if you qualify for a free Peace of Mind Planning Session ($750). During this comprehensive session, we can help you determine the best methods for protecting your assets if death or disability should occur. However, these sessions are limited to 10 per month so call today!

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Heather helped my mother get her estate in order before her passing. It was only after that we learned just what a great job Heather did. Recently, I had the opportunity to have the Chubb Law Firm help me also with my estate. I feel confident that Heather and her team helped me to consider all of the appropriate options and to make the right choices including options I DIDN'T KNOW I HAD! This is the kind of law firm one imagines when you think about getting good legal advice.

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