As adults, we may find ourselves in a position of role reversal where we become caregivers to our parents. As children, we would have relied on our parents for many things including financial advice and knowledge (or lack thereof). Now that we and our parents have grown older, we may find ourselves becoming the financial caretaker of the family.
Depending on our parents’ knowledge and ability (and stubbornness), this may not be necessary or even a preferred option. However, for those of us who have a good relationship with our parents, having a joint account with our elderly parents may be a financially sensible choice.
Here are 4 reasons why you should consider opening a joint account with your parents.
#1 You Can Bank Online And Pay Bills On Their Behalf
If your elderly parent is less internet-savvy, they may still default to banking in person. While going to the bank, queuing and talking to a teller may not be your idea of a good time, they may not be a total chore for some elderly folks who may enjoy the social interaction. However, if your parent is frail or has mobility issues, going to the bank becomes a legitimate hassle and during this pandemic, a possible source of infection.
My mum still prefers to handle her bill payments using the old-fashioned paper and cheque method. However, for certain urgent bills where cheque payment would not be received in time, she may request that I make the payment online for her. Having a joint account makes it easy for me to pay the bills on her behalf, especially if we are not in the same household.
#2 You Can Monitor For Unusual Transactions and Fees
With most savings account having some form of fall-below fees, it can be easy to accidentally let the balance dip below the threshold, especially if we do not hold a lot of cash balance in the account. Having a joint account with your parents allows you to monitor for any unnecessary fees being deducted, including fall-below fees which can be easily remedied.
Additionally, if you also have access to their credit card information (e.g. by being the main cardholder), you can also monitor for unusual transactions such as unauthorised credit card transactions. This will allow you to stop a credit card fraud swiftly by notifying the bank to reverse the transactions as soon as possible.
Other fees and transactions you can look out for include annual fees and late payment charges.
#3 You Become A Line Of Defense In Case Of Scams
As internet banking and online transactions become increasingly commonplace, online scams have also proliferated. Unfortunately, many of these scams target the elderly and vulnerable. While we would like to think that our parents are smart enough to not fall for scams, the truth is that scammers are increasingly sophisticated in their schemes and even young people can be scammed easily.
Having a joint account with my parents does give me a peace of mind that I can monitor for unusual transactions and activities. If a sudden large sum is withdrawn, I would be alerted that something is amiss and talk to my parents to find out more and hopefully stop any scam in its tracks.
#4 The Account Will Not Go Into Probate Upon Their Death
One major reason why my parents have a joint account with me is that they want me to have access to the funds upon their passing.
For individual bank accounts, upon the accountholder’s passing, the account would be suspended by the bank. The funds can only be accessed after going through the process of probate (where the executor of the will distributes the funds) or the process of administration (where the estate is distributed according to intestate succession). This can take weeks to months depending on the estate.
However, for joint accounts, the right of survivorship applies. The bank can release all the remaining account balance to the surviving joint account holder. This means that my parents’ funds are immediately accessible by me – the joint account holder, upon their passing. For my parents, this gives them the peace of mind that their funeral expenses would be taken care of and that the family would not have to worry about financial expenses when grieving and setting their affairs.
Note: this would apply depending on the bank and the type of joint account. Please check with your bank on the necessary documentation for account closure and balance release.
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