A popular idea among our aging population is to add a co-owner, often an adult child, to an elderly person’s bank account. The intended goal is for the co-owner to manage the elderly person’s finances upon illness or incapacity.
Elderly people also add co-owners to bank accounts to allow quick access to cash for funeral and other expenses upon death.
Elderly people express the belief that the jointly owned bank account will then pass into their estate at death to be divided according to their will. Or elderly people express a belief that the joint owner of the account knows to distribute the funds among heirs upon the elder’s death.
Unfortunately, that is not how joint accounts work.
A jointly owned bank account permits multiple co-owners to access the account without permission from the other co-owners. As joint owners, co-owners are entitled to any or all the funds in the account even without contributing to the fund balance. Making a person a joint owner of a person’s banking account will certainly assist with the ease and convenience of writing checks, making deposits and accessing cash.
A jointly owned banking arrangement can work well, but consider the following risks:
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