Be careful when adding names to bank accounts

by | Feb 29, 2016 | Estate Planning |

As you grow older, you may decide that it makes sense to put someone else’s name on your bank account so that he or she can assist you with transferring money, paying the bills, and the like. For example, if you have a son or daughter living near you in Rochester, you may ask that person to help out and add his or her name so that you don’t have to be physically involved in every single payment.

While this can seem wise and convenient, it’s important to be careful about doing this, as it can cause issues down the road.

The problem is that the law may dictate that the contents of the bank account go to anyone who is considered to be a joint tenant with a right of survivorship. This is set up so that your money simply passes to your spouse when you pass away, but, if you listed a son or daughter–or anyone else–in that capacity, they could then have the right to claim the entire contents of the account.

In some cases, this can undermine your will. If you have $300,000 in the bank, for instance, and you also have three children, you may write in your will that $100,000 should go to each child. However, if the child who lives near you and is listed on the account has the right of survivorship, he or she could cut the others out and take the full total. The rule of law may be considered more important than instructions in your will, even if it goes directly against what you intended.

This situation shows just how important it is to carefully consider all aspects of estate planning.

Source: American Bar Association, “Introduction to Wills,” accessed Feb. 29, 2016