What should I do if my son’s name is on my checking account and he is being sued?

Question:
I have my son on my checking account so that he has access to my money and can pay bills. Recently, he has had a bit of a problem paying his own bills and is being sued by a credit card company. All the money in the account is mine and I can’t afford to lose it. Is there any problem for me by having his name on my account?
Answer:
Yes. You should take your son’s name off of your account as soon as possible.
If your son’s creditor gets a judgment against your son for the amount he owes, the creditor will then try to find ways of satisfying the judgment. One of the first things the creditor will look for is any bank accounts in your son’s name. The creditor can use the judgment to “garnish” any bank accounts in your son’s name. This “freezes” the account and you will not have access to your money to pay bills. Any checks that you may have outstanding may bounce and you may have to pay charges for “insufficient funds” even though you have money in the account. The bank may also charge you an administrative fee for having to go through the paperwork of the garnishment.
Even though the money in the account is yours, the creditor may argue that your son’s name on the account indicates that he is an owner of those funds and that he is entitled to some of the money in the account. The creditor may force you to go to court to prove that the funds in the account are totally yours and not subject to garnishment for your son’s judgment.
I often see older people placing a child’s name on their bank accounts as a way of planning for incapacity. However, as with all legal transactions, there are advantages and disadvantages which should be carefully discussed with an attorney prior to taking action. As in this case, placing someone on your bank account is not always the best or safest approach and can have unexpected and undesirable consequences.