Should I add my child as joint owner on my bank account or my home?

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There may be several reasons you might want to add your child as a joint owner with you on an account or real estate property.

You may want your child to be able to help manage your assets and pay your bills. You may want to avoid probate or protect assets from long term care costs.

Adding a joint owner to an asset may seem like a good idea but there are several things you should consider:

  • If a joint account owner gets into financial trouble, creditors can seize a joint account for payment. For example, if your child gets in a car accident, is held to be at fault, and a judgment is awarded against your child, your child’s creditor issues become yours as well.
  • You will lose exclusive control over your assets. Instead of being able to close an account or sell your home with your signature alone, with joint ownership all owners need to agree to the transfer.
  • Joint ownership is permanent. You cannot undo the joint ownership unless the other owner/owners agree to the change.
  • At your death there is no requirement for the joint owner to share the asset with your intended beneficiaries. Joint ownership generally includes a right of survivorship. When you pass away the other owner receives your interest in the jointly held asset. Your child may not feel the same way as you do about ‘doing the right thing’ at your death. This can create bad feelings among family members and can lead to litigation.
  • You may be creating potential gift tax issues.
  • Adding a child on to your accounts will not protect your assets from long term care costs. The state looks at all assets that you have an ownership interest in when determining Medicaid eligibility. Adding your child’s name to the account will not mean it is unavailable when determining if you meet the asset limits for Medicaid.
  • There are other options to meet your goals while avoiding the potential downfalls to joint ownership with a non-spouse. You can give your child access to your accounts using a Durable Power of Attorney for Finances. You can avoid probate by adding a beneficiary designation to accounts. This is sometimes called a Pay on Death (POD) or Transfer on Death (TOD) designation. You can execute a Transfer on Death deed to avoid probate on any real property you own. A Revocable Living Trust can assist with asset management during your lifetime and avoid probate of assets owned by your trust at your death.

An experienced Estate Planning and Elder Law attorney can help you understand your options and develop a plan to carry out your goals. Contact the Estate Planning attorneys with the Law Offices of Nay & Friedenberg in Portland, Oregon at (503) 245-0894 to set an appointment.

If you would like to learn more about estate planning and elder law options, click here to receive our FREE Legal/Financial Planning Guide.