By Jim Schuster, Certified Elder Law Attorney www.JimSchuster.com
24330 Lahser, Southfield, MI 48033 248-356-3500
Often an elder makes his or her accounts joint with a child so that he or she can help dad or mom with their bills. This can lead to some nasty problems. Everybody knows about elder abuse and no thinking parent would make a bank account joint with a child who could not be trusted. However even trustworthy children have problems. Here are some that do not involve theft by the child
Loss of savings to a child's creditors: If a joint owner defaults on a loan with the same bank that the account is held, the bank can take the money out of the account. The same is true if the joint owner has a credit card default with the same bank. What may be more surprising for the elder is the case where the child is merely a co-signer on a debt for another, say an auto loan for a grandchild. That leads to the same problem, the elder's account may be taken to pay the debt because the child co-owner is a cosigner.
The same is true if the child goes through bankruptcy: the elder's account will be seized by the bankruptcy trustee until the elder proves the child put no money in the account.
The elder may face loss of control of the property. For example if a child has been added to the deed on the house, then anyone of the co-owners has veto power over any loan, mortgage or sale of the property.
Adding a single joint owner, perhaps a caregiver child, can cause probate battles between the children upon the elder's death if the joint owner refuses to share the account with the siblings.
All of these problems are avoidable by simple planning using a trust or power of attorney with proper beneficiary designations.
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