Adding a Beneficiary to a Checking Account

Hi good morning welcome to this week’s edition of the family wealth planning partner blog series. And this week we’re talking about adding children to a checking account. This came up because we had a conversation with a client yesterday where a client was in with his daughter and they were talking about a number of different things mostly around estate planning. But the conversation came up Arun adding his daughter to his checking accounts. And so we simply said you know what are you trying to accomplish. And his concern was probate and incapacitation. So in the event he passes away you want his assets to pass outside of probate and that’s pretty understandable. Most clients prefer that. And number two in the case he becomes incapacitated he won his daughter to be able to continue to pay bills and keep the lights on. And again that’s another very common concern especially for elderly clients. And so we said OK that’s fine but let’s look at the consequences behind doing that. Number one if your daughter wanted to she could just walk in to the bank and withdraw all the funds and there’s really not much that he could do about that. Number two if for some reason your daughter were to go out and make a bad decision one night and have creditors come in after those assets would then be subject to creditors.

And then number three his his issue was he wanted his daughter who’s here locally on the account but he had other children and he said if you pass away that asset goes directly to your daughter and you hope that she would spread those assets equally amongst your other her siblings your other children. But she’s not required to do that. And so we said let’s look at a better solution. The best solution is any of that the can becomes incapacitated. He could have a power of attorney that would name his daughter to step in and act on his behalf. So case solved on that case. In the event of his passing he could add a beneficiary to his account. It could be a trust or name his children individually again. Case solved by adding a beneficiary to a checking account and by the way we would always recommend that if you open a checking account or savings account always had a beneficiary. Doesn’t mean they have access to the assets in the account. It just means they’re simply a beneficiary. So again if you have a situation where you’re concerned about an elderly parent or if you’re elderly and you want to add a child as a beneficiary or you want them to act on your behalf a power of attorney solves that issue of incapacitation and adding a beneficiary. Typically when you go to a bank it’s called a transfer on death or a payable on death provision. Add beneficiaries to your checking account and you solve the issue of when you pass away. So thanks for watching and look forward to catch us next week with a different topic. Thanks for watching.