People concerned about failing health and possible incapacity often open joint bank accounts with their caregivers. When signing your signature card on these types of accounts, you can be giving away more than you think.

Adding a child or caregiver as a joint tenant to a bank account or other account seems like a convenient and inexpensive way to have them manage your financials should the need arise. More often than not, this approach works -- but it does have risks. And, when such an arrangement doesn't work, the results are often disastrous.

Joint tenants have unlimited access to every penny in a joint account. Even a trusted and responsible child/caregiver can suffer financial loss, a medical emergency, divorce, or other setback that can tempt him or her to dip into your funds.

Suppose that a child/caregiver is sued. All money in joint accounts may be available to creditors -- regardless of whose money it "really" is. While some states have laws that prevent this risk, it is prudent to avoid keeping excessive amounts in joint accounts.

Another risk: suppose a parent wants his or her estate divided equally among the surviving children. The bank account (or any other asset), if held in joint tenancy with right to survivorship, becomes the property of the surviving joint owner at death. This happens regardless of what you specified in your will or trust. In these cases, someone gets more.

What can you do to protect yourself? Use a living trust with a "convenience only" limited bank account with no survivorship rights, but in the name of the trust. This is the safest way to allow for your incapacity without risking your plans and money.

REMINDER: You may want to review your existing signature cards to make sure they are a "convenience only" limited bank account with no survivorship rights.

Robert Focke and Associates offers free initial consultation on estate planning, so that you can understand your options. Please contact our offices at 713.850.7799.