Should You Add Your Kids as Joint Owners on Your Accounts?

Adding your kids as joint owners to some of your investment accounts might seem like a good idea, but it can actually create a lot of headaches. Here’s why.

Is it a good idea to add one or more of your children as joint owners to some of your investment accounts?

I see this happen time and time again. For example, a single parent might add their son or daughter as a joint owner on their checking account in case something happens to them. That way, their child can use that account to start paying their bills.

While this arrangement does seem convenient on the surface, and sometimes it does work out, there are a couple reasons why it usually causes more problems than it solves in the event that the parent becomes incapacitated or passes away, especially if there are multiple children involved.

First of all, it makes distribution difficult after the parent dies. For example, if they have three children and they choose the oldest one to be the joint owner of their checking account, that account becomes theirs once they pass away. This means that oldest child has to look at all the assets of the account and distribute them accordingly, which can be logistically challenging. If all three kids are on the account, distribution can turn into a complete mess.

Another problem with having one or more of your children as a joint owner of one of your accounts is, if something happens to you, they receive the money from that account in their estate, and they may not want that money in their estate.

If you want to ease your children’s financial situation in the event that you become incapacitated or pass away, there are a couple alternative options you can pursue which I think are better.

The first is adding them as signers of your accounts. This means they can still write checks under the account, but they don’t own those assets. Another thing you can do is establish a power of attorney for your children so they can still act on your behalf if and when you become incapacitated.

If you have any questions about this topic or there’s anything else I can help you with, don’t hesitate to reach out to me. I’d love to help you.

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