Third, your child could lose eligibility for public funds, and your grandchildren could lose the opportunity for scholarships and financial aid. If your child ever needs public assistance, such as Medicaid, the account will be counted as an available resource and may make them ineligible. Likewise regarding your grandchildren; they may not be able to get student aid if the account which their parent’s name is on inflates their parent’s assets.
Finally, there are a few other potential consequences. If your child dies before you, then the money in the account (if held as tenants in common) could be part of their estate and would be distributed under the terms of their will, rather than yours. Or if your child spends the money in the account without your permission, because their name is on the account they would not be required to pay you back. Either way, the money in your account would have ended up out of your control.
Even though adding a child’s name to your bank account seems harmless, it can backfire, and lead to consequences for both you and your child. We can help you find ways to protect your bank accounts during your lifetime, and pass money on to your children without the threat of creditors reaching that money. For more information contactour office in Camden, Maine by calling 207-236-4888.
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