I'm on My Parent's Bank Account—Are There Risks to This?
Absolutely. If you are on the title to your parent's bank account, there is always a risk that you will be accused of elder abuse and possibly other claims. It's not uncommon for parents to place one child as a joint owner on an account because most children will assist either or both parents with paying their bills as they get older.
In most cases, a parent is not placing a child on a bank account so that the account passes to the child upon the parent's death (though that may be the case with an only child). Instead, the intention is usually to allow the child to have quick access to assist with bill payment or other financial matters if something happens to the parent.
This usually happens because people misunderstand how estate planning documents are supposed to operate, or simply opt for a shortcut at the bank. The correct way to hold title in such a situation is for the parent to place the child on the account only as an agent under a power of attorney. If you have a general power of attorney, this can be used with the bank, otherwise, you can create a special power of attorney which is only applicable to the bank account.
In either case, however, you do still run the risk that someone may bring a claim for elder abuse against you. The best way to mitigate the risk of this is to create a record-keeping system, maintain records of all incoming and outgoing transactions from any accounts that you have access to, and prepare periodic accountings. Yes, this means saving all receipts at any restaurants, salons, ATM withdrawals, or any other transactions.
Why? Well, if someone raises a claim for elder abuse against you, one of the primary issues will be to determine what occurred with the accounts that you had access to. If you are able to prepare a comprehensive accounting with your records which explains the transactions, the scope of the litigation can quickly be narrowed and you can take more of an offensive approach in seeking court approval of your accounting.
While litigation is always expensive, if you take these precautionary steps, you could save a substantial amount of attorney's fees and costs in litigation if it arises.
You may also be interested in:
- I'm Listed in a Power of Attorney—What Should I Do?
- Mom & Dad Shouldn't Be Writing Checks Anymore
- My Parent Needs a Power of Attorney—Can I Have it Prepared for Their Signature?
- What is a Power of Attorney?
- What is an Advance Health Care Directive? How is it different from a Living Will or a Power of Attorney for Health Care?
- The Cost of a Conservatorship Can Be Substantial
- What is a Conservatorship, and Do I Need One?