Put your child on your bank account?

11 Sept 2024 · 1 min

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1:01

In this video, the presenter warns against adding a child as a joint holder on a parent’s bank account. He explains that doing so exposes both parties to each other’s financial liabilities—creditors, divorce, bankruptcy, or IRS actions can reach the shared funds. He also notes the risk of a child misusing the account. To protect both generations, he recommends either naming the child as a beneficiary on the account or granting a formal power of attorney, while acknowledging that power of attorney can also be abused. The overall message is a cautionary advisory on safer ways to manage intergenerational finances.

Chapters

This seems like a great idea, doesn't it? It's actually a terrible idea. I know tons of people do this. Mom and Dad are getting older. They put you on their bank account so that you can help them with the finances, and then when they're gone, the money's all yours. But here's one of the big downsides, and it affects both of you. You and your parents are exposing each other to your own financial decisions. If you as the child get into a situation where your creditors are coming after you, Guess whose money they're also going to take? Mom and Dad, if your child gets into a bad divorce or a bankruptcy, or they have the IRS coming after them for whatever reason, your money is fair game. And Mom and Dad, I know your kids are little angels and they would never do this, but some kids have been known to clear out Mom and Dad's bank accounts. So what's the answer? Well, the answer is to keep everybody safe. You either name the child as your beneficiary on the account, or you give them your power of attorney through an actual power of attorney document. I realize there's still room there for abuse by your power