Keep Kids Away From Your Bank Accounts

7 Sept 2023 · 1 min

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1:01

In this advisory monologue, the speaker warns parents against adding their children as joint owners or beneficiaries on personal bank accounts. While some view this as a simple, inexpensive way to provide for a child, avoid probate, or ensure access to funds after the parent’s death, the speaker outlines several serious drawbacks. First, joint ownership can trigger gift‑tax reporting requirements once the annual exclusion ($16,000) is exceeded, obligating the parent to file a gift‑tax return. Second, the child’s personal liabilities—such as judgments or creditor garnishments—can attach to the joint account, allowing creditors to reach the parent’s money. The speaker emphasizes that these risks outweigh the perceived convenience and suggests that more appropriate estate‑planning tools (e.g., payable‑on‑death designations, trusts, or proper beneficiary designations) should be used instead of joint accounts.

Chapters

Do not put your kids on your bank accounts. I get so many comments from people suggesting that this is a good idea and a way to get around probate and for the kid to have access to funds. I want to make it crystal clear how I feel about it. This can seem like a quick, easy, cheap way to handle things, you know, just a gesture of love and trust, but it can have extremely negative consequences for both the parent and the child. All right, so let's say you're in your 60s, you've got a kid in their, in their 20s or 30s. They're a very good kid. They've never had any problems whatsoever. Let's say you've got an account with $200,000 in it. You want to put your kid on that account so they can have access to funds if anything ever happens to you. On the face of it, it seems like a great way to handle things, but here are some problems. Number 1, gift taxes. If your child is on that account, they have the same right to that money as you do. You can gift away up to $16,000 a year, but above that, you got to file a gift tax return. Number 2, your child's liabilities. If your child gets into trouble with a creditor and that creditor gets a judgment against them, they can garnish your account for the