Alright, let’s get real here.
You thought it was no big deal when your mom or dad added your brother or sister onto their bank accounts, right? Well, think again.
Adding a child to a parent’s bank account might seem like a good idea on the surface, something a lot of elderly folks do. But what most people don’t realize is that it can lead to some serious family drama after they’re gone.
Here’s the deal: when a bank account is made joint between a parent and a child, as joint tenants, the surviving joint account holder automatically becomes the sole owner after the other passes away. They just have to show the bank the death certificate, and boom! The account is theirs.
And that’s where the problems start. Too often, the brother or sister who’s now the sole owner treats the funds like it’s all theirs, without considering what the parent wanted. I’ve seen this scenario play out time and time again. And unless things are done right, you can bet your bottom dollar the heirs are going to start fighting over the money, especially if the parent put all the cash in there. Now, is that fair to the other siblings? Not in my book, and the law tends to agree.
Let’s talk about the legal nitty-gritty. The courts have a presumption when it comes to joint bank accounts. If there’s a situation where a parent gratuitously transfers property to an adult child (meaning the child didn’t contribute anything), and there’s no clear evidence of the parent’s intention, the court will presume that the parent meant for the child to hold the funds in trust for the beneficiaries of the parent’s estate.
Now, let’s get specific. If the account is opened and the co- account holders are listed as ‘joint tenants,’ it means they each have equal ownership and access to the funds. No permissions needed. Plus, it comes with that right of survivorship. If one account holder passes away, the others automatically inherit the whole deal.
Contrast that with ‘tenants in common.’ Each owner has their own distinct share, and there’s no automatic right of survivorship. If one owner passes, their share goes according to their will or estate plan.
So, what do you do to avoid this mess? First, the parent needs to make their intentions clear. They should sign and date an acknowledgment, stating why they added the child to the account. Keep it crystal clear. Then, review the parent’s will. Make sure it reflects their intentions about jointly held assets. And last but not least, sit down with all the beneficiaries and lay it out. It won’t guarantee no disputes, but it’s a good step to avoid a family feud.
Remember, folks, communication and clarity are key. Don’t let joint bank accounts turn into a battleground. Your parents will thank you.
The foregoing is provided for informational purposes only and is not intended
as legal advice. Please consult with a solicitor to address your specific fact situation.