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I need reasons to tell wife to close joint acct with her son

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My future wife has had a joint checking account with her son since before he went to college. Now he has graduated and has a job. For the sake of simplicity, I want to suggest she close the account and let junior track his own money (which he is capable of doing), but I can't think of a specific legal or technical reason by which to convince her. She says it's good to have two names on every account in case somebody gets run over by a bus. Her son is trustworthy, too, but I just think there must be some pitfalls that I don't even know about. Are there any?

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  1. If some creditor were after your wife, then they could attach the joint checking account between her and her son. I would tell her to have the account in his name only and then have "pod" payable on death designation. so if something happened to junior then mom would be the beneficiary on the account

    good luck


  2. Well, you can suggest that she not be on the checking account as an active member but that she can be attached to the account as someone who can handle the moneys if something does happen to him.  The bank can do this.  Just let her know that you think it is time for him to try to manage his own accounts and since the two of you will be shareing accounts it may not be good to have her name attached to too many accounts.  PLUS if her name is on the account she needs to claim any money on her taxes and she should not be paying taxes on his money.  Good luck.

  3. Actually, it is a good thing. She is right. My kids are minors and I have them on my joint savings in case something happens to my husband and myself. They can't access it without an adult though.

    I cannot think of a good reason, especially since he is good with finances. In fact, if something happens to you and she needs the financial help then it actually is a great way for him to help provide for her.

    Perhaps she is hanging onto it because she is having trouble letting him go. At least it is just an account. There could be worse scenarios. She could insist that he live with the two of you until he marries.

    There is no reson to be jealous, as he is probably just trying to make sure she is taken care of if she gets into a bind. I wouldn't worry though, because when he finds a wife, he will probably end up closing the account for her and then she would not have a choice.

  4. Does she use the account?  Or is her name just on it "just in case"?

    I have to agree with Deedee though.  As long as both are responsible then there's no reason to take her name off the account.  If Junior wants to separate it then he could just open a new one and not use the old one.

    Someone I know suddenly lost her husband a few months ago.  Her husbands name was on the account, hers wasn't.  It was a long time before she had access to the money in it, and in the meantime had to rely on friends and family to provide for her children.  It's always good to have joint access if both parties can be responsible.

  5. any overdraft by either one, would still be the responsibility of both to repay.

    Any judgment against either one could attach to the bank account, even though there is only one debtor.

    Otherwise, if both are responsible persons, then your future wife is right, it is good to have more than one name on the account.

  6. From gift tax rules, the IRS says that as long as the money in the son's account came from his income and your wife never touches it, it's his money.

    From asset seizure rules, the money could be seized for debts of either party and if this happened with your wife, then your son would be scrambling to prove that it's his money, not hers.

    As for probate, a simple POD would do.

    As for joint tenants with rights of survivorship (the run over by a bus and mom wants to use his money to pay for the medical expenses or a funeral scenario), I don't think that's really an issue.

  7. The biggest pitfall here is that should your fiance, or her son for that matter, be sued for something, the entire account is attachable.  It's not necessary to have accounts jointly owned in case of death of one or the other.  It's much better to make a single account "POD" or paid on death to a named beneficiary.  The bank has the necessary paperwork to accomplish this.

  8. I had a similar arrangement with my father when I was younger (in my 20s).  The account had both of our names on it, but I was responsible for reporting any interest income and paying taxes on it.  Like your future step-son, I was financially trustworthy and maintained records for the account.  The only reason I had my Dad on the account was "just in case."  I was concerned that if something happened to me, I did not want to be a financial burden on anyone.  By having his name on the account, he could pay bills on my behalf without having to use his own money.  After my Dad has passed away, I asked my sister to take his place on that account.  It gives me peace of mind to know my bills can be paid with my money right away.

    Hope this helps.  Good luck!

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