Senior Living News

Autumn View Gardens works to ensure residents are safe in all areas, from physical health to financial security. Memory care situations can be particularly challenging when it comes to finances. Seniors who need help managing their money might consider establishing a joint checking account with a younger relative. Before making this major financial decision, it's important to understand how it works and what it means for you.

Why Establish a Joint Checking Account?

With age, making financial decisions and remembering to pay bills can become challenging. Seniors are often targeted for financial scams — older adults lost $1.7 billion in financial scams in 2021. Residents in memory care communities can be particularly vulnerable. A joint checking account lets a trusted loved one manage finances when it becomes difficult, giving them easy access to the money.

Benefits of Joint Checking Accounts

When another family member is added to a checking account, some benefits for the senior's financial situation include:

• Prompt bill paying: Seniors with memory difficulties sometimes fall behind on their bills, which can cause late fees, collection activities or cancellation of services. The other named person on the account can take over bill paying or set up automatic payments to keep the finances on track.
• Monitoring: When someone else is on the checking account, they can monitor it regularly. This can help them spot the senior using the account for things they shouldn't or failing to pay bills. They might also notice fraudulent activity immediately when it's easier to handle.
• Access in emergencies: If you have a medical emergency or become incapacitated, the loved one on the joint checking account can easily access your money. This means they can pay for your care and other bills on your behalf.
• Access after death: Estates typically have to go through probate, which means the money in your bank account couldn't be tied up for months before your family can access it. If a loved one is on the account, they can have immediate access to that money.

Risk of Joint Checking Accounts

Giving someone else access to your bank account also comes with risks. It can cause issues for both seniors and their loved ones. Here are some risks to consider:

• Shared ownership: Since a joint checking account shares ownership equally, either person can use or withdraw the money whenever they want. This can cause issues if the senior falls for a scam or overspends.
• Improper money handling: The loved one chosen for the account could also mishandle the money. They might take the money for themselves or fail to manage the money wisely.  
• Financial qualifications for financing: Since the loved one has equal ownership over the money, it could count against them when qualifying for certain things. For example, financial aid for college uses income and assets to determine qualifications. If the bank account is substantial, it could affect the type of aid someone qualifies for.
  
  
• Debt collections and bankruptcies: If your loved one has financial difficulties, the bank account could be at risk. The court will consider it that person's asset if they file for bankruptcy, and creditors could try to get the money to settle debts.
• Tax complications: Things can also get confusing on taxes if the shared account earns interest. Both parties have to claim the interest on their taxes. This could negatively impact your loved one's taxes when they don't use the money for themselves.
• Complications after death: If the joint account still exists at the time of death, the remaining money belongs to the loved one on the account. This can create a tricky situation if there are siblings or other loved ones involved who feel they should get that money.

How to Choose Someone for a Joint Checking Account

An adult child is a natural choice as a joint checking account holder, but another trusted adult or family member can also work. Consider the person's financial situation and how well they handle their money. If they struggle with money, they might not be trustworthy with yours. You want someone who cares about you and will put your needs first. Someone who is physically close and understands your situation can be better at managing your finances.

Alternatives to Joint Checking Accounts

Joint checking accounts can work in some situations, especially when both parties are responsible with money. However, some alternatives can offer some of the same benefits without the risks. Consider these options:

• Signature authority: Making someone an authorized signer is similar to having a joint account without giving them shared ownership of your money. They can inquire about balances, sign checks, make withdrawals and do other tasks with your account. However, they don't automatically get the money when you pass away like they do with a joint account.
• Power of attorney: This option allows someone else to handle certain tasks, such as paying bills and depositing checks.
• Revocable living trust: When money goes into a revocable living trust, a loved one can help manage the assets.

The best solution for you depends on your situation. Those circumstances could sway you toward a certain solution. An estate attorney can help you decide on all types of issues with legal advice on how to protect your money and make your estate easier for your loved ones to handle.