Adding your children to your bank accounts makes them co-owners of those accounts. If your children have creditors who have obtained a judgment against them, your funds are now subject to a bank garnishment to collect the judgment. In other words, adding your children to your bank accounts makes your accounts subject to the claims of your children’s creditors. Likewise, if your children owe the IRS, your funds could be subject to an IRS lien or levy. Nationwide, parents have lost millions of dollars by making this catastrophic mistake.
If you need your children to help you manage your bank accounts, you should appoint them as your agent using a Durable Power of Attorney. The Durable Power of Attorney will give them the authority to manage your financial affairs without exposing your assets to their creditors. Another option is to transfer your assets to a Revocable Living Trust. You then list your children as your successor co-trustees, thereby giving them the ability to manage your assets without exposing those assets to their creditors.
Don’t expose your bank accounts to the financial problems of your children. Before you even think about adding your children to your bank accounts, get legal counsel from an attorney with expertise in estate planning.
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