Joint bank account w/parent or not?

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juliewongferra
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Joint bank account w/parent or not?

Post by juliewongferra » Sat Jun 10, 2017 10:33 pm

Hi all!

I am wondering about the pros and cons of having a joint bank account with a parent.

The short story: my neighbor died, and he had a bank account in his name only, and his surviving wife is having to go through some extra steps and paperwork to get the money transferred to her account. So this freaked out my mom, who also has a bank account in her name only and wants to add me as a joint owner on her account. (My dad is deceased.) Her heart is in the right place, I think, of not wanting me to have to go through extra paperwork when she dies. But I am not sure of all the implications. (mainly taxes, but also if she overdraws the account if that affects my credit or other things. She has responsible financial habits, but that's not to say they won't change in the future. And I am a responsible person who would treat this as a name-only transaction; I would not pry into her habits because I would steadfastly disclaim any right to her money as long as she is alive.)

Most of the research I've done deals with joint accounts of spouses, and is mainly relationship-based (e.g., "joint accounts are a sign of trust") but the parent/child joint account issue isn't as prolific. Hoping to get some ideas from other Bogleheads! Thank you so much!

cheers,
jwf
If you aren't familiar with Mr. Bogle and his investment philosophy, then you don't know Jack!

sport
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Re: Joint bank account w/parent or not?

Post by sport » Sat Jun 10, 2017 10:45 pm

Your mother could just make the account POD or TOD to you. In that case, if she died, you would automatically become the owner of the account. If she needs you to help manage her financial affairs, a durable POA would suffice. You do not need to own the account now.

Avo
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Re: Joint bank account w/parent or not?

Post by Avo » Sat Jun 10, 2017 11:44 pm

Has your mom thought about estate planning overall?

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Dale_G
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Re: Joint bank account w/parent or not?

Post by Dale_G » Sat Jun 10, 2017 11:56 pm

sport is correct - a Pay On Death or Transfer On Death designation on the account takes care of the succession issue.

That said, one of my sons is a joint holder on a checking account maintained by my wife and I. The objective is for him to easily move money around for mom if I give up the ghost. Some banks are likely to ignore a POA unless it is on their own form - regardless of any laws to the contrary.

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123
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Re: Joint bank account w/parent or not?

Post by 123 » Sun Jun 11, 2017 12:57 am

A joint account (parent(s) and child) is probably the easiest way of handling things assuming that there is only one child. If there are multiple children the family dynamics can get more complicated but it could still work okay.
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Mike Scott
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Re: Joint bank account w/parent or not?

Post by Mike Scott » Sun Jun 11, 2017 5:42 am

My Dad asked me to put my name on his accounts a long time ago. It made him feel better even though I don't have any idea how much money he has in the accounts or see statements etc. It may be helpful someday.

On the other end of the age spectrum, we have had our names on our minor child accounts (required in some cases). We continue to have separate but joint accounts with our college age kids because it makes transferring money among ourselves more convenient. Our local bank allows any number of free electronic access only accounts. These will probably start going away in the next few years when they are not helpful anymore.

Doing this requires some level of trust in the other parties; especially on the joint accounts.

fundseeker
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Re: Joint bank account w/parent or not?

Post by fundseeker » Sun Jun 11, 2017 6:08 am

I have been joint owner on my very old father's account for years. He gets the tax forms, not me. One advantage of me having access is that I can see his account online when I go to my account at the same bank, which allows me to see any unusual activity, which is great because as parents get older, they're more likely to fall for scams and get ripped off.

POD, though it won't allow you to check on the account or anything else before death, is an excellent plan, and she may be able to list more than one child as the recipient.

OnTrack2020
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Re: Joint bank account w/parent or not?

Post by OnTrack2020 » Sun Jun 11, 2017 7:09 am

Yes, you can add your name, or not.

The tax forms would come to her, since the account would be linked to her social security number as the primary.

If she has good financial habits now, that is likely not going to change going forward unless there is a mental decline or major illness. If it does change, then you would have a much easier time of stepping in and helping. When my dad got sick, since my name had been added on the account prior, I was able to easily step in, take care of banking issues, and pay his bills for him. I also had POA at the same time, so was able to deal with other things. I remember when I needed to deal with some of my father's issues at the post office, they wanted to see the POA. The POA ends when a person dies. When my father died, because my name was on the account, I was able to keep paying his bills from the account---utility bills on his house until his house sold, property taxes on his house until the house sold, lawn mowing needed to still be done until his house sold, medical bills he had prior to his death, the funeral home, lawyer fees, accountant fees, etc. A POA may work for the time being, but as your parent ages and health declines, you could probably be added onto the account then if you don't want to currently. POD would be for if your parent passes, but will do nothing for handling their financial affairs while they are living. Lots of things to think about.

By being a joint owner, if, by chance, your mother would overdraw, you would also be responsible as your name is on the account--that's the way it works. As you mentioned, you don't need to pry, but you can certainly check once in a while at the bank to make sure everything is okay.

In reverse of that, as a parent, my (and my husband's name) is on all of our children's accounts. One is of legal age. While he is away at college, it just makes it so much easier. I can transfer a little money if the balance is getting low, etc.

Viking65
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Re: Joint bank account w/parent or not?

Post by Viking65 » Sun Jun 11, 2017 7:21 am

If your parent is financially responsible, and there is a strong element of trust between you, I think it is a good idea. My mother added me to her normal checking account 15 years ago or more. I never thought much about it. But then, she has had a series of serious medical issues and associated cognitive decline, and I have had to step in assume responsibility for all her financial affairs. Having the joint account that was already in place that I could use made this part so simple, almost seamless. I just started writing checks. I also have POA, but as others have stated, although it is a powerful document, many financial institutions can be prickly about granting POA, so you will often have to jump through additional hoops. As a benefit, when you parent passes, this account will still be in our name so you can continue to use it for your parent's final expenses while they were living, even after their death.
Good luck.

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Re: Joint bank account w/parent or not?

Post by Swansea » Sun Jun 11, 2017 7:28 am

fundseeker wrote:I have been joint owner on my very old father's account for years. He gets the tax forms, not me. One advantage of me having access is that I can see his account online when I go to my account at the same bank, which allows me to see any unusual activity, which is great because as parents get older, they're more likely to fall for scams and get ripped off.

POD, though it won't allow you to check on the account or anything else before death, is an excellent plan, and she may be able to list more than one child as the recipient.
Excellent points. My Mother and I had a joint account. We used her SSN as primary, so I had no tax liability. I would monitor her account for fraud, and found two cases were checks were stolen, filled out by the thief and cashed. In one case it was a former family member. Often experienced fraudsters will steal a check further down than the most recent in the pack to help escape notice.

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Re: Joint bank account w/parent or not?

Post by livesoft » Sun Jun 11, 2017 7:33 am

Things work both ways. If you have credit problems and go bankrupt, then a joint account with a parent will allow those assets to come into play.
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rakornacki1
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Re: Joint bank account w/parent or not?

Post by rakornacki1 » Sun Jun 11, 2017 8:08 am

Assuming that you both have a very trustworthy relationship, then I would suggest a simple Power of Attorney. Easy, simple, non-invasive.

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dm200
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Re: Joint bank account w/parent or not?

Post by dm200 » Sun Jun 11, 2017 8:12 am

If there are significant balance(s) in such accounts, a joint account goes directly to the surving joint owner (usually accounts are with survivorship) and override the will. That could cause unintented consequences with other heirs.

A joint owner can be hald liable or responsible for adverse actions on the account, such as biunced checks or fraudulent deposits.

johnnyc321
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Re: Joint bank account w/parent or not?

Post by johnnyc321 » Sun Jun 11, 2017 8:43 am

Joint accounts are subject to the creditors of each owner.

I recommend using a durable power of attorney with a TOD/POD designation.

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dm200
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Re: Joint bank account w/parent or not?

Post by dm200 » Sun Jun 11, 2017 8:47 am

johnnyc321 wrote:Joint accounts are subject to the creditors of each owner.

I recommend using a durable power of attorney with a TOD/POD designation.
Absolutely true!

It all may depend on the nature of the account and how much is normally in the account. If the parent is "low risk", financially responsible and the amounts are not large, then a joint account "for convenience" is probably OK.

KESP
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Re: Joint bank account w/parent or not?

Post by KESP » Sun Jun 11, 2017 9:03 am

My mother put me as a joint owner on a bank account years before she got sick. I don't even remember why. She was very fiscally responsible and obviously trusted me. When things went downhill health wise I was able to seamlessly continue paying her bills. I have 3 siblings who knew all about this. I kept detailed records of what I paid for, although no one ever asked me for these when she died. I then split the money up between the 4 of us and closed the account. We all get along and trust each other or maybe it would not hav ended so well.

ChrisC
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Re: Joint bank account w/parent or not?

Post by ChrisC » Sun Jun 11, 2017 9:41 am

johnnyc321 wrote:Joint accounts are subject to the creditors of each owner.

I recommend using a durable power of attorney with a TOD/POD designation.
This. And a creditor could include a former spouse in a divorce proceeding. MIL thought she was making life easier for her daughter and son by naming them joint tenants on a bank account and stock she owned. Son is now in a divorce proceeding and these joint accounts are fair game for equitable distribution to his wife in the proceeding. Also, the stock, which has appreciated substantially, loses some step up in basis when transferred to other joint tenants.

I think the best thing to do in these circumstances, assuming a living trust is not appropriate, is to have a POA over assets and POD for bank account that might be needed to finance funeral expenses and estate matters. The POA should allow online access to financial accounts as well -- at least Wells Fargo and PNC permits us with online access for those bank accounts that we have a POA on file with them.

txranger
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Re: Joint bank account w/parent or not?

Post by txranger » Sun Jun 11, 2017 10:08 am

Not sure if it's been mentioned but watch out for tax implications!! I understand IRS may consider it a "gift" if u add on a non spouse partner, including your child! There usa 12k/yr gift limit, higher amount may be taxable.
Better to designate as beneficiary imho.

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tadamsmar
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Re: Joint bank account w/parent or not?

Post by tadamsmar » Sun Jun 11, 2017 10:22 am

Not sure if this is for a specific state, but:

"A joint account, with someone other than a spouse, will be frozen if the account is greater than $25,000. The joint owner will need a death certificate and a tax release to gain access to any account larger than $25,000."

http://cmrs-law.com/practice-areas/probate-q-a/

You did not specifically say what extra paperwork you were talking about. With a POD you will still need to get a death certificate, I think. It does reduce some paperwork for accessing the funds assuming they would otherwise go to the estate.

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BolderBoy
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Re: Joint bank account w/parent or not?

Post by BolderBoy » Sun Jun 11, 2017 10:54 am

sport wrote:Your mother could just make the account POD or TOD to you.
Do this and have her add you as an additional signer on the account now, not as a joint owner.
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dm200
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Re: Joint bank account w/parent or not?

Post by dm200 » Sun Jun 11, 2017 11:38 am

tadamsmar wrote:Not sure if this is for a specific state, but:

"A joint account, with someone other than a spouse, will be frozen if the account is greater than $25,000. The joint owner will need a death certificate and a tax release to gain access to any account larger than $25,000."

http://cmrs-law.com/practice-areas/probate-q-a/

You did not specifically say what extra paperwork you were talking about. With a POD you will still need to get a death certificate, I think. It does reduce some paperwork for accessing the funds assuming they would otherwise go to the estate.
This is news to me and I do not believe it is universally correct, since aplicable state law applies. Therefore, unless you can determine what happens in a specific case, I would not depend on this citation.

btenny
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Re: Joint bank account w/parent or not?

Post by btenny » Sun Jun 11, 2017 11:49 am

When my father in law passed away in 2013 he had my wife on his checking account as a joint owner and signer. She had been to the bank with him and met his banker and also was on his safe deposit box. That dual ownership worked great. He had $50K or so in the checking account, so a lot of cash. This was in Arizona. My wife used that account to manage and settle all his estate stuff with ease. She did not have to wait 2-3 weeks to get death certificates or anything. She just wrote checks as needed to pay bills and make distributions and so forth. She did not change anything about the account until she closed it 18 months later.

So yes putting your name on your Mom's checking account will let you help her now if needed now and after she passes. It really helped us.

Good Luck.

grandmacassie
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Re: Joint bank account w/parent or not?

Post by grandmacassie » Sun Jun 11, 2017 2:22 pm

We need to be careful with terminology. Joint ownership is one thing, has a legal meaning (and comes in different flavors, I think) and comes with benefits and pitfalls as previously noted. "Putting your name on an account" can mean anything.
In our case, DH had POA for his mom. As she aged, she added him as an authorized signer on her checking account. For a while, prior to needing to invoke the POA, DH just handled paying her bills for her via the signature power. Note that he was not an owner of the account, just an authorized signer of checks.
You might try the "authorized signer" route, if that meets your needs. You and your mom should also have an attorney prepare a durable POA for future needs. It is also a good idea, once that document is prepared and signed, to take it down to the bank along with your mother IN PERSON, and have it recorded by them. Your mother, while competent, can assure the skittish bankers that you are you and this is her signature, etc. That's what DH (a lawyer) recommended that my sister do with my mom, also for her brokerage.

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tadamsmar
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Re: Joint bank account w/parent or not?

Post by tadamsmar » Sun Jun 11, 2017 2:23 pm

dm200 wrote:
tadamsmar wrote:Not sure if this is for a specific state, but:

"A joint account, with someone other than a spouse, will be frozen if the account is greater than $25,000. The joint owner will need a death certificate and a tax release to gain access to any account larger than $25,000."

http://cmrs-law.com/practice-areas/probate-q-a/

You did not specifically say what extra paperwork you were talking about. With a POD you will still need to get a death certificate, I think. It does reduce some paperwork for accessing the funds assuming they would otherwise go to the estate.
This is news to me and I do not believe it is universally correct, since aplicable state law applies. Therefore, unless you can determine what happens in a specific case, I would not depend on this citation.
The American Bar Assn. says it is state specific:

"Some states automatically freeze jointly owned account upon the death of one of the owners until the tax collector can examine it, so the surviving partner can't count on getting to the money immediately."

https://www.americanbar.org/content/dam ... eckdam.pdf

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juliewongferra
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Re: Joint bank account w/parent or not?

Post by juliewongferra » Mon Jun 12, 2017 4:24 pm

Hi, OP here!

I just wanted to say thank you so much to everyone for sharing their thoughts. I apologize for not being more prompt with my thanks and recognition of the kindness of this board. I truly do appreciate your thoughts and you all have given me a lot more ideas to research and consider.

cheers,
jwf
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Nearly A Moose
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Re: Joint bank account w/parent or not?

Post by Nearly A Moose » Tue Jun 13, 2017 9:30 am

I'd also second (third? Fourth?) the points about using TOD or POA instead of actually being a joint account holder. How awful would it be if you faced some liability issue and all of a sudden your mother's entire savings account got drawn into it?

Since banks are finnicky, have a conversation with your moms bank (and include her) to figure out exactly what forms they need on file so that you can exercise POA if needed.

And, the obvious practical solution is to just have your mom share her online account access information with you. That way, if she is unable to, you can still pay her bills, etc. I have no moral or ethical problems with this so long as she is agreeable to it.
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celia
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Re: Joint bank account w/parent or not?

Post by celia » Wed Jun 14, 2017 10:35 am

Although there are pitfalls with doing this, it is not as bad as doing this for all of your parents' assets:
viewtopic.php?f=2&t=217221

I would be afraid that your mom would think it is so easy to set up on a checking account, why not do it to the house, car, investments, etc.?

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dm200
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Re: Joint bank account w/parent or not?

Post by dm200 » Thu Jun 15, 2017 10:08 am

Nearly A Moose wrote:I'd also second (third? Fourth?) the points about using TOD or POA instead of actually being a joint account holder. How awful would it be if you faced some liability issue and all of a sudden your mother's entire savings account got drawn into it?
Since banks are finnicky, have a conversation with your moms bank (and include her) to figure out exactly what forms they need on file so that you can exercise POA if needed.
And, the obvious practical solution is to just have your mom share her online account access information with you. That way, if she is unable to, you can still pay her bills, etc. I have no moral or ethical problems with this so long as she is agreeable to it.
Yes! Educate yourself on the applicable law and regulations of POAs in your state and demand/insist that your bank or credit union complies with any requirements for accepting a POA.

dbr
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Re: Joint bank account w/parent or not?

Post by dbr » Thu Jun 15, 2017 10:30 am

For a person still alive who needs help from me I have a durable power of attorney that is checked off to apply only to a specific checking account and no other financial affairs. This would not extend past death of that person. The account is titled John Smith, Tom Jones POA. I can see that account online with my accounts, can transfer money in and out, and can write checks.

Carl53
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Re: Joint bank account w/parent or not?

Post by Carl53 » Sat Nov 16, 2019 3:52 pm

Old thread but there is some pertinent information relating to our family situation. Appreciate it if you can add to what you think is required.

FIL passed early this year. MIL added SIL to sizable checking account, apparently as joint owner to help with paying bills. FIL SS still on the original account, but a second small checking account set up under MIL SS (SIL on this account too) with the intent to move funds to it. Transfer other than initial 10k, or so never happened. I'm thinking that MIL had she lived would have had to file gift paperwork even though the intent was just to have help writing checks, not to preclude splitting money between siblings should something happen. MIL passes. Once the dust settles, and bills paid, the expectation is that SIL will split up accounts with siblings. Will gift paperwork need to be filed for MIL? SIL?

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