If you are a California resident working on your estate planning, you may be thinking that it would just be easier to add your child onto your financial accounts instead of going through the steps of creating a valid will or trust. After all, you will need to pay for the legal work and when a will goes through probate, it can come with a price tag. So simply adding your beneficiary to your account just makes sense, right? Wrong. You can actually find yourself paying for that shortcut in a multitude of ways down the road.

According to The Judicial Branch of California, bank accounts are categorized as property. Since California is a community property state, having your child attached to your finances can put your money at risk. In the case of a divorce, your child will likely need to list all assets to which they have access. This means your account may end up on the table when assets are divided.

Debts can pose another issue. If your child runs into financial troubles and creditors come calling, the last thing you want is for your savings or checking accounts to be frozen or used to clear up debts. All the parties listed are considered owners of the account, which puts your financial status in jeopardy based on how your child handles his or her own money.

Finally, when you have a will or trust, you can set parameters for who has access to your money and when. By adding a child to your account, he or she will be given ownership to the contents. This means withdrawals may be made wihout your permission. If you have more than one child, this can lead to sibling disputes and hard feelings after you are gone. With a will or trust, you can maintain full control over your accounts while living and avoid unnecessary conflict and potential loss of funds.

Please consider this post as an educational resource and not as a substitute for legal counsel.