The Disastrous Dangers of Putting Your Children on Your Accounts and Deeds

So many people think that they need to put their children’s names on their checking accounts, savings accounts, and deeds to their property so that the children can help them out and inherit without probate.

This is such a dangerous, and possibly disastrous thing to do I rarely, if ever recommend it.

When you put their name on your accounts, you are giving the children free reign.  They can write checks or withdraw money without your permission for any purpose.  They could decide to “borrow” a little money that never gets paid back.  This is not the worst danger however.

In Arkansas, the minimum requirements for liability in auto insurance are $25,000 to cover injury to any one person, and $50,000 to cover all.  The minimum requirement for property damage is $25,000.

So, you child gets into an accident that is their fault.  They “total” the other car, a fairly new Cadillac Escalade, and put the drive into the Intensive Care Unit (ICU) for 10 days.  The average cost for ICU is $4,000 per day.  Multiply that by 10 days and it comes to $40,000 in immediate medical bills.  That doesn’t count lost work, pain, suffering, and ongoing medical treatment.

Your child’s insurance covers $25,000 of the hospital bill, leaving $15,000 owing.  They cover $25,000 of the damage to the other car.  A 2017 Escalade sells for about $61,000.  That leaves $46,000 unpaid by insurance.  $25,000 + $46,000 is $61,000 your children owe.

But, as most younger people, they only have a few thousand in the bank and little equity in their home.  But, the court finds out their name is on your account!  Since their name is on your account, the money in the account is considered at least partially theirs.  The court orders that half the money be paid out of the account towards the damages and medical bills.  That is money you were depending on for retirement savings.

The same applies to the deed to your house.  In that same scenario, the court could order a lien be placed against your house for the damages to the Escalade.

You have better options to

1. Allow your children to write checks for your benefit
2. Pass accounts to children without probate
3. Pass real estate to children without probate and the courts

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from DeWitt Law Firm, PLLC