Should I add someone’s name to my bank account?

Should I add someone’s name to my bank account?

Many people add a child, relative or friend to a bank account to enable that person to take over the account and pay the bills if one should become disabled. This is not a wise approach. When you add someone to an account, that person becomes a co-owner, and has the right to withdraw and use all your funds for himself or herself. Upon your death, that person owns everything in the account, regardless of any beneficiary provisions on the account or in your Will. The better approach is to appoint the person you trust as your attorney-in-fact under a power-of-attorney. That way, the person has a fiduciary legal responsibility to manage and use the funds prudently for your benefit.

Appropriate beneficiary designations on bank accounts is an effective way to keep the funds out of your probate estate. However, you need to be careful not to give up control of your funds or expose yourself to unnecessary risk. You also want to make sure the manner in which your account is titled and designated does not undermine your estate planning objective.

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Posted in Elder Law FAQ