Joint Bank Accounts with Family Members

[myrdale]

My mother has a couple of joint bank accounts. One has her and my name on it. The other has her and my sister's name on it. I've never been sure of her rhythm or reasoning, neither to the best of my knowledge have any significant amount of cash (<$10,000). But I've been thinking about a few different scenarios.

#1 What happens if she over drafts the account? Does that reflect poorly on me?

#2 What if I wanted to give her a cash gift (or vise versa) that exceeds the IRS limit? Could I simply put the cash into the account, and then she take it out and avoid reporting?

#3 What about estate tax? Suspend belief for a moment and say she had millions in the account. Does this get around estate tax?

#4 What if I were to get a divorce? Would my crazy, soon to be ex-wife have any claim to the account?

[kork13]

1) Yes
2) No
3) No
4) Yes

Frankly, joint accounts have all of the worst qualities that one might imagine.

I'll need more time than I have at the moment to research the details, but I'm 90% sure the above is accurate.

[myrdale]

I'll need more time than I have at the moment to research the details...

This applies to me as well.

This account is something that has existed as long as I can remember, but I've never had any interaction with.

My initial thought is to suggest she take mine and my sister's names off of the separate accounts, and combine them into a single account. I would think having less accounts would make it easier to manage on her end. After that she could set us up as the beneficiaries on the account.

[kork13]

This applies to me as well.

This account is something that has existed as long as I can remember, but I've never had any interaction with.

My initial thought is to suggest she take mine and my sister's names off of the separate accounts, and combine them into a single account. I would think having less accounts would make it easier to manage on her end. After that she could set us up as the beneficiaries on the account.

My brothers and I were the same -- as young children, my grandparents opened a joint account between them, my mother, and each of us. They would toss money in there at will, and we basically ignored three fact that it was there. While I was in college, my mom borrowed money out of each of our accounts for a home improvement (with our permission, though looking back it's weird relationally). Once we all became adults & on our own, we found it simplest to just choose the accounts entirely and roll the money into another account eventually. Oddly, it was easier to close the accounts than to simply remove joint account holders.

Bottom line: I agree -- best to not have joint accounts with anyone you're not married to. Get off the accounts (or close them), then getting set as beneficiaries will make transferring you both upon her eventual death dramatically easier.

[Thrif-t]

I have a situation where this comes in handy.

When my kids were minors I opened them credit union savings acct with me as joint owner. I also have my own credit union acct where they are co owners with me.

They've since moved to online banks but keep a little in the credit union acct so we can all transfer money back and forth to each other like our own little version of Venmo.

I don't keep a lot in my savings there either just enough to keep it open so I'll have a relationship with the credit union should I need any kind of a loan.

Works for us.

[Petunia 100]

My mom and I have a joint checking account which is really just hers. I am on it so that in the event I need to step in and pay her bills for her for some reason, I can do it using her own money.

[Drake3287]

Yep, I was on my mothers accounts although I never gave overdraft or similar issues a worry. When she passed away it couldn't have made things easier when I was the Trustee to the estate. Anyone with a financially stable/trusting parent should be on their accounts. I assume my parents Trust attorney recommended it years prior. Saves a lot of headache.

[Scallywag]

I have an old bank a/c with my mother. I did nothing about it even after we became estranged in 2011, aside from not making any new contributions to it. If she predeceases me, then I'll pay whatever taxes become due when I become the sole owner of the a/c. If I predecease her, then she can keep the money although I suspect she may cut a check out to my husband, minus the taxes due on the account.

I now have a joint account with my husband and daughter. She also has a/c on her own, into which she funnels any income she receives from the jobs she does. The reason she's on the joint with her father and me is if there is ever an emergency involving us (the parents) and she needs to access money quickly. She does not contribute anything to this money and it's an a/c that we fund with paychecks etc merely to pay bills so the balance on it each month after all the bills have been paid is only a few hundred bucks.

[scfr]

Bottom line: I agree -- best to not have joint accounts with anyone you're not married to.

I wonder if you'd feel differently if you were single?
My mom has made me a joint account holder on her checking account so that the utility and property tax bills will get paid if she is hospitalized or if she dies right before one of them is due. (She's single.)
She bounces checks sometimes; that has not negatively impacted me. I know I might get stuck with some bounced check fees after she dies, and that used to really bother me, but it doesn't any more.

Right now I wouldn't have a joint account of MY money with anyone but my husband. But if he died, I'd probably add my sister or another family member (niece or nephew) just so I'd know things would be taken care of seamlessly.

[myrdale]

I wonder if you'd feel differently if you were single?
My mom has made me a joint account holder on her checking account so that the utility and property tax bills will get paid if she is hospitalized or if she dies right before one of them is due.

This seems like a really weird justification for having a joint account holder, so the bills will get paid at end of life.

I've always paid my bills on time and in full (save one power bill which got lost in the mail). If I or my parent(s) were on their death bed, the last concern I would have is the power bill getting paid on time or was a month late.

I could understand this situation if you stated that you handled all of her bills for her, I think that to me would be the perfect justification for the joint account.

I do have a cousin who bounces checks on a regular occasion as well. Apart from something hitting without your knowledge (say a gym membership auto renewal for $500), I struggle to understand how people overdraft so easily.

[LivingAlmostLarge]

This seems like a really weird justification for having a joint account holder, so the bills will get paid at end of life.

I've always paid my bills on time and in full (save one power bill which got lost in the mail). If I or my parent(s) were on their death bed, the last concern I would have is the power bill getting paid on time or was a month late.

I could understand this situation if you stated that you handled all of her bills for her, I think that to me would be the perfect justification for the joint account.

I do have a cousin who bounces checks on a regular occasion as well. Apart from something hitting without your knowledge (say a gym membership auto renewal for $500), I struggle to understand how people overdraft so easily.

paying a credit card. I am not joint with anyone other than my DH. But once my dad passes I'm sure we'll fix that for my mom and set up maybe a trust?

[scfr]

This seems like a really weird justification for having a joint account holder, so the bills will get paid at end of life.

Naw - not weird at all - she has a reverse mortgage, so we need to make sure the property taxes get paid on time. Remember that people always have their reasons for doing what they do. Isn't that a nearly-universal truth?

And now I need to be on the account to make deposits to her account. She can hardly get around any more, so if one of her elderly friends sends her a check I can take it to the bank and deposit it to her account. I did that just today. There was a time when you could deposit to an account that is not your own, but not anymore, at least not where she banks.

[disneysteve]

And now I need to be on the account to make deposits to her account. She can hardly get around any more, so if one of her elderly friends sends her a check I can take it to the bank and deposit it to her account.

I do all of my mom’s deposits for her. I use her bank’s app on my phone. I just log into her account and use the mobile deposit feature. I don’t need to be on the account and don’t need to go to the bank.