If you didn't get a chance to read my first article on this subject, Your Clients and Their Children: The Problems with Joint Bank Accounts, it may be helpful to review it as a means of providing context for this article. As noted in that first posting, if a client couple wishes to make their bank accounts into joint accounts with their children, there are various resolutions for handling that wish efficiently and in less risky ways. Hopefully, some of these points will help you with possible client questions on this simple, yet very important subject.
Solution 1: Transfer on Death
If your client's goal is to bypass the probate process, this option will still allow them to keep the ownership risks of assets in check. An easy way to handle this situation is by adding a "pass of title documentation" to their bank account. Many banks call these documented options a "transfer on death" or "payable upon death" provision.
Both of these provisions are nothing more than adding a beneficiary designation to their bank account, allowing the account to pass to the designated child or children at the parent's death. While this option protects the parent's assets from risk of loss due to a child's negligence or bad decisions, it should still be highly questioned within the context of the parent's estate planning objects, as the risk of bypassing their will may not be in line with the parent's big-picture desires. Keep in mind also that this option doesn't allow the child to write checks and/or pay bills from the bank account, which may be your clients' main goal in this process.
Solution 2: A Convenience Account
Many banks offer this optional alternative to putting a child's name on their parents' bank account. However, most banks don't promote them, so don't expect a bank teller to know what you're talking about if asked. This option authorizes the child/children to write checks/make deposits to the account, but doesn't grant them any ownership rights to the money in the account.
