This is a question I often hear in my elder law practice. My answer: be careful.
This is a very common practice. Some banks even advise their customers to do this. Most adult children who have their names added to their parents’ accounts do so with only the best intentions; often it is just to help their parents pay bills. The problem that often arises is this: if you are a joint owner of a bank account, you are also considered a joint owner of the funds in the account. Should you have a lawsuit or a personal lien filed against you, file for bankruptcy, or divorce a spouse, those funds may be subject to those proceedings. You may find it difficult to prove those funds are not actually yours.
A financial power of attorney is generally a better, cleaner alternative. Powers of attorney allow you to assist family members with managing their expenses and avoid account ownership problems. Powers of attorney terminate on the death of the principal. Another option is to be a signor, not an owner, of an account, if the financial institution allows that. It usually is not clear. Or, if probate avoidance is your parents’ concern, they may be able to designate accounts as payable on death (POD) to a particular beneficiary(ies). If you must be joint owner of a bank account with a parent, it may be best to limit it to one account with a small enough balance that will not devastate your parent if the funds were lost.
This is general information that may not be applicable to your specific situation and is not intended to be legal advice. If you have specific questions, please contact an experienced attorney.
Contributed by Charlotte C. Johnson, JD