Any risk to being added to parents bank accounts?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
j0nnyg1984
Posts: 234
Joined: Sun Apr 24, 2016 9:55 am

Any risk to being added to parents bank accounts?

Postby j0nnyg1984 » Mon Mar 20, 2017 7:20 pm

Hi,

I already "control" my parents investment accounts, but they have stated that they want to officially add me to their two bank accounts. I have no objection to this, but was wondering if there is any risk to myself or them if either of us runs into legal trouble.

I have ~$400k of my own assets, own a house, have almost state maximums for auto insurance, and carry 1mm umbrella coverage. If I was to lose some massive lawsuit, would it be possible for someone to go after my parents assets based on me being named on their accounts? The same question stands for the other situation - if someone sues them, would they be able to come after me for anything? My parents are far less insured with no umbrella.

Thanks!

Silk McCue
Posts: 239
Joined: Thu Feb 25, 2016 7:11 pm

Re: Any risk to being added to parents bank accounts?

Postby Silk McCue » Mon Mar 20, 2017 7:36 pm

"Your older relative can add you as an authorized signer to a checking or savings account, without making you a joint owner. This means you can write checks and withdraw and deposit funds. However, because you are not an owner of the account, all transactions must be made on behalf of the elder." - from nolo.com

If you are a joint owner their accounts could be exposed if you were in a lawsuit but not if you were simply an authorized signer. As an authorized signer no one could sue them and come after you through your signature only authority on their bank accounts.

j0nnyg1984
Posts: 234
Joined: Sun Apr 24, 2016 9:55 am

Re: Any risk to being added to parents bank accounts?

Postby j0nnyg1984 » Mon Mar 20, 2017 7:38 pm

That's fantastic, Silk, thank you!

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CAsage
Posts: 444
Joined: Sun Mar 27, 2016 6:25 pm

Re: Any risk to being added to parents bank accounts?

Postby CAsage » Mon Mar 20, 2017 7:57 pm

I would add ... being an authorized signed during their lifetimes while leaving the accounts in their (and eventually one..) name is better than joint, but you might consider also ensuring that the account has a beneficiary or "transfer on death" statement recorded at the bank. I helped my Mom fill that out at BofA a year before she passed (and was fading slowly...) as it makes inheritance quicker (which might be the reason they wanted to add you).


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