Should I Put My Child's Name On My Bank Account?

Sometimes a parent would like to give their child or other trusted family member access to funds in their bank account in order for them to pay bills and other expenses, in the event they are unable to handle their financial affairs themselves.   
This simplified approach however, is not recommended, for a number of reasons. First and foremost, is that by placing your child's name on your bank account, you have given that child the legal right to withdraw money from that account for their own purposes. Additionally, money in the joint account will be subject to the creditors of your child, and if that child is married, presumably one- half of the money in the joint bank account is considered to be marital property, subject to the claims of their spouse.

Another reason given by parents for placing their child's name on their bank account as joint owner, is to avoid the probate process.  This is because joint accounts with right of survivorshippass title to the entire bank account directly to the surviving joint owner, and thus will not be subject to estate administration in the Orphan's Court or Register of Wills. However, the resulting vesting of title to all of the money in the joint account to the child upon the death of the parent may not be what the parent wanted. Rather the parent and child may have agreed that upon the death of the parent, the child would divide and distribute the money in the joint account among the child's siblings. Unfortunately, however, the child is under no legal obligation to distribute the funds as had been agreed upon. Additionally, money in a bank account which passes outside of probate, will not be available to pay taxes, administrative fees, and other estate expenses.

A preferable alternative to putting a child's name on your bank account, to enable him or her to pay your bills, is to open a "convenience account" at your bank.  By opening a convenience account you are authorizing your child to write checks from your account, however, you are not granting them any ownership rights to the money in that account, nor will that account pass to them upon your death. You will need to contact your bank to open a convenience account.

If on the other hand, your reason for placing your child's name as joint owner of your bank account is to pass title to the account to them upon your death, again, you can contact your bank and request a "payable upon death" or "transfer upon death" designation" on your account, so that the money in that account passes to your child outside of probate upon your death.

Published in the January 2010 issue of Generations newspaper (January 1, 2010.