Many children wonder what will happen as their parents grow older. Some Massachusetts residents have been given powers of attorney over their parents but are unsure of how to proceed. Many people question whether they should have a joint account with their parent or parents to ensure that bills are paid on time. Like many things, there are both advantages and disadvantages to sharing a joint account, especially if that person is the original account holder’s child.
As many might expect, a joint account is the easiest way to ensure that bills and other expenses are paid on time. This also makes it easier to track other withdrawals and deposits in the account as well as potential fraud. Finally, if the child of the account holder has been given power of attorney and is also a joint holder of the account, then that person will have immediate access to the funds after his or her parent has passed. This could help to ensure that expenses that arise after a person’s death are paid quickly.
However, there are as many disadvantages as there are advantages to sharing a joint account. One is that the debts from everyone associated with the account can affect the funds in the account. If money is added to the account by anyone other than the original account holder, usually an elderly person, then it could affect his or her eligibility for government programs or other benefits. The IRS might also place a tax on the funds in the account if they see adding an additional name to the account as a gift.
There are alternatives to joint accounts. A power of attorney does not necessarily have to be named on the account to help ensure that bills and other expenses are covered. The account holder may choose to have this person handle his or her finances only after being incapacitated or otherwise being unable to handle them personally. Others may choose to create a trust or assign a guardianship to ensure that expenses are paid for on time.
Massachusetts residents who wish to discuss their estate planning options could benefit from consulting with an attorney. A lawyer may be able to help his or her clients to create a will, assign powers of attorney or create any other necessary plans. They may also be able to help alter an existing plan if necessary.