WASHINGTON — AARP and the American Bankers Association Foundation are making adults over 50 years old who are considering joint bank accounts aware of potential hazards.
Joint bank accounts are often viewed as an easy way to give financial caregivers the ability to manage money on behalf of older adults. In some cases, they are used so the co-signee inherits the funds upon death of the primary account holder. However, both parties rarely understand the risks associated with joint accounts or the alternatives available to them.
“Setting up a joint account essentially removes the financial firewall between both parties,” said Corey Carlisle, senior vice president, bank community engagement. “There are often safer alternatives available that will protect the assets of older customers, as well as those of financial caregivers.”
“At any age, joint accounts may work for some, but we urge you to use caution before signing on the dotted line,” said Debra Whitman, Chief Public Policy Officer, AARP. “If you don't look before you leap, you could fall into trouble with your finances.”
Before deciding if a joint account is right for you, you should consider the following factors:
- The co-signee becomes financially responsible for taxes on the account. That means should the primary account holder owe the government back taxes at any point, the co-signee would be just as responsible to the IRS for that money.
- The money is just as much theirs as it is yours. Once someone is listed as a joint-account holder, the co-signee and the primary account holder own that money equally in the eyes of a financial institution. Both parties will have the ability to withdraw funds whenever they see fit.
- Creditors can come after those funds. If an account owner were to incur substantial medical bills, or face a lawsuit, the funds in the joint account could be used as a liable asset. A creditor might not differentiate between primary account holder and co-signee.
AARP and the ABA Foundation are collaborating to protect older Americans from financial abuse and exploitation. As a part of this effort, AARP and the ABA Foundation will create resources such as this infographic to educate older Americans and their caregivers about ways to protect their assets and their loved ones’ assets, as well as conduct separate research on how banks are addressing fraud and exploitation issues, whether there is a consumer draw to banks that prevent fraud and exploitation, and provide financial caregiving banking tools.
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Note: The recommendations herein do not constitute professional financial advice. Please consult a financial advisor before making financial decisions that may affect your future.
About AARP
AARP is a nonprofit, nonpartisan organization, with a membership of nearly 38 million, that helps people turn their goals and dreams into real possibilities, strengthens communities and fights for the issues that matter most to families such as healthcare, employment and income security, retirement planning, affordable utilities and protection from financial abuse. We advocate for individuals in the marketplace by selecting products and services of high quality and value to carry the AARP name as well as help our members obtain discounts on a wide range of products, travel, and services. A trusted source for lifestyle tips, news and educational information, AARP produces AARP The Magazine, the world's largest circulation magazine; AARP Bulletin; www.aarp.org; AARP TV & Radio; AARP Books; and AARP en Español, a Spanish-language website addressing the interests and needs of Hispanics. AARP does not endorse candidates for public office or make contributions to political campaigns or candidates. The AARP Foundation is an affiliated charity that provides security, protection, and empowerment to older persons in need with support from thousands of volunteers, donors, and sponsors. AARP has staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Learn more at www.aarp.org.
About ABA Foundation
The American Bankers Association is the voice of the nation’s $15 trillion banking industry, which is composed of small, regional and large banks that together employ more than 2 million people, safeguard $11 trillion in deposits and extend more than $8 trillion in loans. The ABA Community Engagement Foundation (ABA Foundation), a 501(c)3 corporation, is the successor to the ABA Education Foundation established in 1925. Through its leadership, partnerships, and national programs the foundation helps bankers provide financial education to individuals at every age, elevate issues around affordable housing and community development, and achieve corporate social responsibility objectives to improve the well-being of their customers and their communities.