03.14.19

Thinking About a Joint Bank Account with Mom? Think Again.


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Taking care of an aging parent can bring a unique set of challenges for both you and your parent. First of all, talk with your parents about estate planning. Do they have a will? Do they have a medical directive readily accessible? When the time comes, have they thought about who they would designate as their power of attorney?

As parents age, they may arrive at a point where they are not quite ready to give full power of attorney to one of their children, yet they want their child to be involved in their finances. 

A logical solution would be to add the child as a joint owner to the parent's bank account. But before you move on this, take a minute. This simple gesture could cause problems down the road. 

What seems like a logical next step in caring for your older parents may end up causing a whole new set of problems. Let's take a look.

Pros: 

  • A joint account is the easiest way to make sure your parents pay their bills.
  • This is a great way to track your parent's funds and make sure they have enough to pay their bills each month.
  • This type of account makes it easy to monitor your parents funds for any fraud or additional fees.
  • Perhaps the biggest positive from setting up a joint account is that upon your parent's death, the account will not have to go through probate. Simply provide the bank with a copy of the death certificate and the funs will be transferred to you, the beneficiary.

Cons:

  • The joint account will not be safe from your debts or liabilities. If you find yourself going through a divorce or bankruptcy, your parent's money is not protected.
  • If your parent or parents do pass away, the money in the account will not be distributed based on the terms of the will. The assets will transfer to the surviving owner of the account.
  • If you add any money to the account it could effect your parent's eligibility for government benefits, like Medicaid. A joint account could also effect your child's eligibility for student financial aid. Financial institutions can count all the money in the joint account as being your money.

There are more pros and cons with the joint account than just these.

There are better solutions available that can prepare you for a family crisis.

Learn more about financial options as a parent ages here.