Adding Adult Child to Account Proves Costly

Adding Adult Child to Account Proves Costly

By Craig Watson, Texoma LIVING WELL Magazine 

When Gail reached age 75, she took her children’s advice and put their names on her checking account so they could pay her bills in case anything ever happened to her. Her children were happily married to sweet spouses that Gail trusted. The teller at the bank was very helpful and Gail followed the teller’s suggestion regarding how to put her children’s names on her account.  Gail had about $3,000 in her checking account, which represented all of her life savings.

A few years later, her son lost his job in management and had to take a lower paying job with the same company. He was glad to have a job of any kind in the anemic U.S. economy. Tragically, Gail’s son and his wife got a divorce due to the financial stress caused by the job change. Gail was sad to lose contact with her daughter-in-law who she really liked. Gail’s son and his wife had three children. The court awarded custody of the children to Gail’s daughter-in-law.

Unbeknownst to Gail, her son fell behind on his child support. The Texas Attorney General Child Support Division is charged with the responsibility of seizing assets from deadbeat fathers to provide court ordered child support for their children, regardless of the situation or consequences. The Child Support Division is a “super creditor” and they have rights that far exceed the norm. Their computer matched the name or social security number of Gail’s son to her account. Early one month, right after Gail’s social security check was deposited in her account, without prior notice to Gail, the Texas Attorney General seized the entire account balance in order to pay the unpaid child support owed by Gail’s son. The seizure caused several of Gail’s outstanding checks to bounce. Even though her son had never made a deposit to the account and all of the money in it was Gail’s, which she needed to pay her bills, Gail lost all of her money. Gail had to depend on her daughter to give her money to pay for her rent, utilities, food, medicine, insurance and other necessities. The entire experience was extremely embarrassing, humiliating and stressful for Gail not to mention costly. Needless to say, the bank teller who helped Gail set up her account did not warn Gail that something like this could happen.

Gail could have accomplished her goals and avoided this disaster if she had consulted with an estate planning attorney instead of listening to advice from her children and a bank teller. An estate planning attorney would have advised Gail to use a Power of Attorney (POA) to allow her children to pay her bills if she ever became ill and unable to manage her affairs. The terms of the POA would have authorized Gail’s children to use the POA to access her account only for her benefit. By putting her children on her account, Gail inadvertently gave them access to her account and they could have legally withdrawn funds from the account for themselves without notice to Gail. Gail could have revoked the POA at any time without approval of her children so she would have remained in complete control. On the other hand, if Gail had wanted to take her children’s name off of her account, the bank would have required Gail to get the approval of her children in order to remove them as signers on her account! Also, if Gail had used a POA, her account would have remained solely in her name, which would have prevented her son’s creditor from seizing it. Finally, the cost of a POA would have been far, far less than the amount she lost by trusting the advice of an unqualified bank teller.

This is a true story. The names have been changed to protect the client’s identity. It is a common occurrence in the writer’s law practice to see parents put their children’s names on accounts with balances much larger than Gail’s. With respect to your estate plan, you have worked a lifetime and made great sacrifices to accumulate your assets. Whether you have a lot or a little, you will benefit greatly by seeking the advice and counsel of an experienced attorney who concentrates his practice in estate planning.

Craig Watson’s legal practice is focused on Estate and Tax Planning, Probate, Guardianships, Elder Law and Corporate Law. Formerly a CPA, he has 23 years of experience as an attorney.  He can be reached by calling 903-813-8500 or at