The Moneyist
‘I am not worried that if we make him a joint owner on our bank accounts that something nefarious would happen’
Last Updated: Aug. 3, 2024 at 11:45 a.m. ET
First Published: July 30, 2024 at 8:35 a.m. ET
Dear Quentin, My husband and I are in our 50s.
I have been thinking recently about the best way to transfer our assets to our son when we pass. We don’t have much — some bank accounts, my retirement accounts and our house. I have my son set up as the secondary beneficiary on my retirement accounts, after my husband, and we are working on drafting a will that covers all of our assets.
I am now wondering if it would make things easier on our son when the time comes if we also added him to our bank accounts now. We lost our other son a few years ago in a car accident, which has me thinking that we could both go at any time. I don’t want to cause a lot of unnecessary additional stress on our remaining son if something happens to us.
For the record, I trust him 100%, so I am not worried that if we make him a joint owner on our bank accounts that something nefarious would happen. If it helps, we are in California.
Estate-Planning Mother
Related: ‘I am an only child’: My father left his $50 million estate to my stepmother in an irrevocable trust. I inherited $1 million. Is this reasonable? Dear Estate Planning, Losing a close family member, especially a child, probably does more than any other experience to turn your life upside down and to make you think about the world from a completely different vantage point. That appears to have manifested itself in your estate planning, something many people neglect to do until the last minute — or until it’s too late.
That said, don’t do this. It leaves you financially exposed, if not by your beloved son, then by creditors or others who may seek to take advantage of him. Here is just one example: If he gets married and it goes south, all assets considered part of the marital estate are open to being split 50/50. Any number of other things could also happen.
There are many ways to make sure that your son receives his inheritance, including adding him as a beneficiary on some of your accounts, as you have already done, and passing your house to him with a payable-on-death or transfer-on-death deed. All of this will make the transfer of assets easier and will help avoid probate for a large portion of your estate.
This issue sometimes comes up when one child adds their name to a parent’s account as a co-owner, which means both parties can withdraw money from the account, rather than as a co-signer, which allows the child to help with bills. I often receive letters about this after the parent dies and the other children realize what has happened.
“An account with one child’s name added solely for convenient access to funds can lead to nasty disputes if that child argues on the parents’ death that he or she was intended to become the sole owner of the account, increasing his or her share of the estate as against the others,” says Neil V. Carbone, trusts and estates partner at Farrell Fritz PC.
“In addition, adding a child to an account could remove that account from being available to fund trusts created by the parents in their wills or revocable-trust agreements for their children for estate-tax planning or asset-protection purposes,” he adds.
Revocable trust and power of attorney In this case, you trust your only son completely, but it’s still not good practice to add him to an account as a co-owner. It’s extremely difficult to undo, and if he were to have an accident and be held liable or otherwise have any creditors on his tail, including for medical debt that may not be any fault of his own, your joint account would be fair game.
If you have a substantial amount of assets, you could set up a revocable trust that would become irrevocable upon your death. You can instruct the trustee to make distributions monthly, quarterly or yearly, and you could also make provisions for a 529 tax-advantaged college-savings plan for your grandchildren.
You could — and perhaps should — give your son durable power of attorney for financial and medical decisions, should you become incapacitated. This enables you to oversee your healthcare treatment by making directives now, and the more specific, the better. They may state, for example, that you would like to have a “do not resuscitate” clause or a “no blood transfusion” clause.
It would also be smart to allocate money for your and your husband’s long-term care if you do not have long-term-care insurance. The cost of nursing-home care varies depending on the type of care, the state a person lives in and the individual facility, but fees can top $125,000 a year for a high-end facility. Medicare and most health-insurance plans do not pay for it.
The question you asked is a good one and, while you may or may not decide to take my advice, take heart in the knowledge that the many alternatives to adding your son as a co-owner on your bank accounts are for your protection as well as his.
The Moneyist regrets he cannot reply to questions individually. Previous columns by Quentin Fottrell: ‘We let our lawyers duke it out’: My $300K brokerage account was accidentally omitted from my divorce. Should I say something?
‘She screamed and raged at me’: I have power of attorney for my mother’s $3 million estate — but my sister feels sidelined. How do I get her off my back?
‘I loved and respected them’: My late father wanted me to inherit his house, but he made a small legal error. Now my two siblings want their pound of flesh.
Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Post your questions, or weigh in on the latest Moneyist columns. By emailing your questions to the Moneyist or posting your dilemmas on the Moneyist Facebook group, you agree to have them published anonymously on MarketWatch. By submitting your story to Dow Jones & Co., the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Dear Estate Planning, Losing a close family member, especially a child, probably does more than any other experience to turn your life upside down and to make you think about the world from a completely different vantage point. That appears to have manifested itself in your estate planning, something many people neglect to do until the last minute — or until it’s too late.
That said, don’t do this. It leaves you financially exposed, if not by your beloved son, then by creditors or others who may seek to take advantage of him. Here is just one example: If he gets married and it goes south, all assets considered part of the marital estate are open to being split 50/50. Any number of other things could also happen.
There are many ways to make sure that your son receives his inheritance, including adding him as a beneficiary on some of your accounts, as you have already done, and passing your house to him with a payable-on-death or transfer-on-death deed. All of this will make the transfer of assets easier and will help avoid probate for a large portion of your estate.
This issue sometimes comes up when one child adds their name to a parent’s account as a co-owner, which means both parties can withdraw money from the account, rather than as a co-signer, which allows the child to help with bills. I often receive letters about this after the parent dies and the other children realize what has happened.
“An account with one child’s name added solely for convenient access to funds can lead to nasty disputes if that child argues on the parents’ death that he or she was intended to become the sole owner of the account, increasing his or her share of the estate as against the others,” says Neil V. Carbone, trusts and estates partner at Farrell Fritz PC.
“In addition, adding a child to an account could remove that account from being available to fund trusts created by the parents in their wills or revocable-trust agreements for their children for estate-tax planning or asset-protection purposes,” he adds.
Revocable trust and power of attorney In this case, you trust your only son completely, but it’s still not good practice to add him to an account as a co-owner. It’s extremely difficult to undo, and if he were to have an accident and be held liable or otherwise have any creditors on his tail, including for medical debt that may not be any fault of his own, your joint account would be fair game.
If you have a substantial amount of assets, you could set up a revocable trust that would become irrevocable upon your death. You can instruct the trustee to make distributions monthly, quarterly or yearly, and you could also make provisions for a 529 tax-advantaged college-savings plan for your grandchildren.
You could — and perhaps should — give your son durable power of attorney for financial and medical decisions, should you become incapacitated. This enables you to oversee your healthcare treatment by making directives now, and the more specific, the better. They may state, for example, that you would like to have a “do not resuscitate” clause or a “no blood transfusion” clause.
It would also be smart to allocate money for your and your husband’s long-term care if you do not have long-term-care insurance. The cost of nursing-home care varies depending on the type of care, the state a person lives in and the individual facility, but fees can top $125,000 a year for a high-end facility. Medicare and most health-insurance plans do not pay for it.
The question you asked is a good one and, while you may or may not decide to take my advice, take heart in the knowledge that the many alternatives to adding your son as a co-owner on your bank accounts are for your protection as well as his.
The Moneyist regrets he cannot reply to questions individually. Previous columns by Quentin Fottrell: ‘We let our lawyers duke it out’: My $300K brokerage account was accidentally omitted from my divorce. Should I say something?
‘She screamed and raged at me’: I have power of attorney for my mother’s $3 million estate — but my sister feels sidelined. How do I get her off my back?
‘I loved and respected them’: My late father wanted me to inherit his house, but he made a small legal error. Now my two siblings want their pound of flesh.
Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Post your questions, or weigh in on the latest Moneyist columns. By emailing your questions to the Moneyist or posting your dilemmas on the Moneyist Facebook group, you agree to have them published anonymously on MarketWatch. By submitting your story to Dow Jones & Co., the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
In this case, you trust your only son completely, but it’s still not good practice to add him to an account as a co-owner. It’s extremely difficult to undo, and if he were to have an accident and be held liable or otherwise have any creditors on his tail, including for medical debt that may not be any fault of his own, your joint account would be fair game.
If you have a substantial amount of assets, you could set up a revocable trust that would become irrevocable upon your death. You can instruct the trustee to make distributions monthly, quarterly or yearly, and you could also make provisions for a 529 tax-advantaged college-savings plan for your grandchildren.
You could — and perhaps should — give your son durable power of attorney for financial and medical decisions, should you become incapacitated. This enables you to oversee your healthcare treatment by making directives now, and the more specific, the better. They may state, for example, that you would like to have a “do not resuscitate” clause or a “no blood transfusion” clause.
It would also be smart to allocate money for your and your husband’s long-term care if you do not have long-term-care insurance. The cost of nursing-home care varies depending on the type of care, the state a person lives in and the individual facility, but fees can top $125,000 a year for a high-end facility. Medicare and most health-insurance plans do not pay for it.
The question you asked is a good one and, while you may or may not decide to take my advice, take heart in the knowledge that the many alternatives to adding your son as a co-owner on your bank accounts are for your protection as well as his.
The Moneyist regrets he cannot reply to questions individually. Previous columns by Quentin Fottrell: ‘We let our lawyers duke it out’: My $300K brokerage account was accidentally omitted from my divorce. Should I say something? ‘She screamed and raged at me’: I have power of attorney for my mother’s $3 million estate — but my sister feels sidelined. How do I get her off my back? ‘I loved and respected them’: My late father wanted me to inherit his house, but he made a small legal error. Now my two siblings want their pound of flesh. Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Post your questions, or weigh in on the latest Moneyist columns. By emailing your questions to the Moneyist or posting your dilemmas on the Moneyist Facebook group, you agree to have them published anonymously on MarketWatch. By submitting your story to Dow Jones & Co., the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
