Is there a downside to being added to someone's bank account?
August 16, 2014 5:14 PM   Subscribe

Is there a downside to being added to someone's bank account? Many, many special snowflake details follow.

My wife and her stepmother have never had a great relationship. She is separated from my wife's father, as well. In the past few years, she seems to have sincerely tried to improve her relationships with everyone involved.

Most recently, she said she wanted to sign property jointly owned by her and my wife's father completely over to him. Additionally, she said she wanted to add my wife to her main bank account, which has a substantial amount of money in it. She is in a rush to do all of this. She says she wants my wife to have access to this account, because my wife is level-headed and will know how to handle it. This is an accurate representation of my wife.

I come from a family where all kinds of financial shenanigans occurred and the kids wound up screwed...and I just can't shake that history, despite the fact that she seems sincere and my googling seems to suggest that she alone is taking on additional risks by adding my wife.

So: Is there a downside to being added to someone's bank account?
posted by lieberschnitzel to Work & Money (16 answers total)
I don't understand the point of "know what to do with it." Do what, exactly??

Please explain, because as it is, the scenario doesn't make sense.

Does the stepmother have an estate planner helping her? A will? A lawyer helping her get her affairs in order?

Is the stepmother seriously ill?

It's not clear why anyone would need a second person to access their bank account.

If I was your wife, I would absolutely NOT want the liability involved in such a maneuver on my shoulders.

Your wife should decline via email, and archive the email several ways.

It just sounds messy, especially without some kind of lawyer or estate professional guiding the process.

Step back from the stepmother, yo.
posted by jbenben at 5:24 PM on August 16, 2014

I am not a lawyer so maybe I am missing something, but I don't see the risk unless it is overdraft risk.
posted by 724A at 5:26 PM on August 16, 2014

To me this sounds like someone planning to file for bankruptcy and incorrectly thinking she can hide assets under another person's name.
posted by MsMolly at 5:43 PM on August 16, 2014 [7 favorites]

I'm on my parents' bank accounts simply so someone has the ability to sign checks if anything should happen to them (e.g., both hospitalized in the same car accident), so this doesn't sound alarming to me. It has caused some minor confusion because I have my personal account at the same bank and they keep attaching my parents' home address to my personal account even though I live several states away.

I'm not sure how old your wife's stepmother is, but as my mom has aged, she's had occasional phases of anxiety about her own mortality, which tend to result in the kids's names getting added to bank accounts, or her compiling financial information and giving it to us. These things tend to happen when one of her similar-age friends has a medical crisis or passes away, and she tends to feel that these things are suddenly urgent (despite her own good health). Has anything like that happened to your wife's stepmother that may have triggered this?
posted by Blue Jello Elf at 5:52 PM on August 16, 2014 [5 favorites]

That's not a good idea, you're just as liable should anything happen
posted by lunastellasol at 6:02 PM on August 16, 2014 [1 favorite]

Legally, from what I know, the risk to your wife is small. However, the mother may be expecting your wife to take over handling her finances and paying the bills out of the account sooner or later. (Maybe sooner) How much does your wife want to be involved in the financial and other dramas of her mother's life, especially as her mother gets older.
posted by metahawk at 6:06 PM on August 16, 2014 [1 favorite]

The first step is a clearer idea of what her mother is hoping to gain from this. I assumed in my answer above that this was an aging issue, that she wants her daughter to help manage her money for her. If there is any question of trying to hide/disburse money due to bankruptcy or federal means testing (such as qualifying for medicaid), it won't work and you are right not to want to be involved.
posted by metahawk at 6:10 PM on August 16, 2014

Make sure the SS# associated with the account is your wife's stepmother not your wife's.
posted by 724A at 6:21 PM on August 16, 2014

I don't see this applying here, but a friend of mine, who divorced and has primary custody of their two kids, has had some trouble collecting child support from his ex-wife. The Ex-wife's mother recently joined her own account with the ex-wife for reasons that made sense at the time (essentially an ease of transferring funds upon her eventual passing), but the ex-wife got her accounts, and therefore her mom's accounts, dinged by the State when child support went into arrears to a sufficient degree. As a result, ex's mom couldn't pay rent. It worked out, but it's going to take a while for the financial repercussions to sort out.

TL;DR: Don't attach yourself to an account when either party is financially unsound, at least if you're relying on any funds inside. Since only (it appears) the stepmom is going to be relying on the funds inside, it's likely to be worse for her if, for example, a miscommunication results in there not being enough money to pay her bills, such as due to an unforeseen/unbeknownst withdrawal due to another upstart bill.
posted by Sunburnt at 6:41 PM on August 16, 2014 [1 favorite]

Not legal advice.

If step-mother would be adding your wife as a joint owner/account holder there would be very little potential liability, mainly just the possibility of overdrafts on that specific account, though many banks might tie liability on other accounts of the co-owners in that entity together (i.e. overdrafts or shortfalls in other accounts might be offset against this account).

Your wife would be able to access funds, not only if step-mom should be incapacitated but at any point after being made a co-owner. She would possibly become the sole owner upon step-mom's death (and vice versa if wife should predecease) if the account is set up as a joint tenancy with rights of survivorship ("JTWROS"). Otherwise she would likely be entitled to at least one-half. An attorney in your jurisdiction is the proper source for accurate information about the applicable rules.

Depending on the actual legal status of the marriage of father and step-mother and their relationship, there could be some stress and conflict if father is unhappy about wife/daughter becoming the co-owner/"beneficiary" of step-mom's money.
posted by uncaken at 6:42 PM on August 16, 2014

The only potential downsides I can see for your wife are (1) the money might be construed as her asset which might be relevant if you have kids who apply for college aid or (2) she might have some interest income imputed to her that was earned on the account. The potential downsides for your stepmother-in-law are many and far more serious.
posted by Lame_username at 8:42 PM on August 16, 2014

Make sure your wife's stepmother is OK both physically and mentally.

Often people who expect to die soon start giving away their stuff in order to leave things "settled" after they go.
posted by Zedcaster at 10:26 PM on August 16, 2014 [2 favorites]

One potential downside is that, with some banks, it is relatively simple to add a person's name to an account, but names cannot be removed without closing the account and starting a new one.

Obviously this isn't legal advice. I'm just a bank customer relating my experience. Yours may differ.
posted by cribcage at 10:41 PM on August 16, 2014

I am a lawyer, but licensed only in my state. In my state, putting someone's name as joint owner on a bank account is presumed an intention to make a gift on the original owner's death, but that is only a presumption. It can be overcome by showing that it was for another purpose, such as convenience to the owner. The two of them could sign something confirming the intention, in my state.

The downside that I see, for someone with whom she has never had a great relationship, is that your wife could end up taking on more and more responsibility for day to day decision-making as her stepmother ages. If she is not willing to accept the entire camel, she should not accept the camel's nose under the tent at this point.
posted by yclipse at 5:08 AM on August 17, 2014 [3 favorites]

I'm in the UK so this may not be relevant. However my ex fiance had me put on his account. When he didn't want to pay any money towards our debts (he was sole earner at the time) the account got sent to collections. Some where along the line his name got removed from the account so my name was the only one on it when it went to court. I ended up with a CCJ that stayed on my record for seven years. Personally I'd avoid it like the plague unless your wife's step mother tells her exactly why she wants that to happen. Even then I'd be likely to turn round and say no.
posted by Ranting Prophet of DOOM! at 1:41 PM on August 17, 2014

She can probably add your wife as the person with Power of Attorney rather than as a joint owner. In that case, she's not legally liable but can transact on the account should anything happen to the step-mother. I wouldn't allow someone to add me to an account as a joint unless I trusted them completely. It can lead to an unwanted level of financial entanglement.
posted by stoneweaver at 11:18 AM on August 18, 2014

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