Can Your Child’s Creditors Garnish Your Bank Account?

Putting your child on your bank account can spell disaster. Find out how this seemingly innocent act can cost you a fortune.


Hello Don Rolfe here with Northwest Legal Planning. And I want to discuss whether or not your child's creditors could possibly garnish your bank account.

And this topic comes up because I just got a question from a person whose account was garnished in the amount of several tens of thousands of dollars. 

Again, my name is Don Rolfe with Northwest Legal Planning, if you have any questions about this or any other estate planning topic, you're free to contact me. You can reach me by going to and schedule a free telephone call or in-person meeting, and I'd be happy to answer any of your questions about estate planning or this topic in particular. 

So I got a call and the person that was on the other end was absolutely frantic. The bank account that she shares with a child for convenience purposes, she logged into it and it was sitting at zero dollars. She had added her child to the account to avoid having to do estate planning and make it easier for her to have her child help pay bills and manage her finances and so forth. And in adding that child to her account made the child a co-owner of all of the assets that were in there. 

And unbeknownst to this woman, her child was having some creditor problems, and actually had a judgment entered against them. That judgment allowed the creditor to garnish bank accounts, wages, and so forth, and they found the bank account, served the garnish on the bank, and the rest ends up with the fact that now the creditor is holding mom's money for child's debt. 

I've talked about the dangers and the downsides of adding children to your bank accounts for convenience purposes, and the problems with it, it could create a taxable event, because it's a present gift, it could allow a child that maybe is having problems to take money from you, whether those problems be, you know, substance abuse problems, gambling problems, those sorts of things. It also causes problems when you pass away in that that money that's in that account immediately becomes the child that's on it with you is the sole owner once you pass away, and if your intention was to split that account in some way amongst other beneficiaries, that just isn't going to happen automatically, and if it does happen, that child is going to have to make gifts which could be taxable events. 

And this now is an absolute real problem that just happened for someone. And they lost numerous tens of thousands of dollars to a garnishment. That they were not party to the lawsuit, they didn't know the lawsuit even existed, and all of that money in the account, while technically the child was a co-owner of it, was mom's. 

And in a former life, I would've been able to help this person, hopefully, or tried to help them. In this case I referred them to a litigation attorney. To try to see if they could possibly scratch back some of that money. Because it was not the child's money, and it was done solely for convenience purposes. But at this point, it's gonna be an uphill battle for her to get that money back. So the convenience of having the child on the account in order to pay bills, which is what this was set up for, was so that the child could log in, and make sure that the power bill, and the garbage bill, and all of those bills, were entered and automatically paid, and any other incidentals that came along were paid. That the child had a debit card so that they could go to the store for mom. 

Those conveniences ended up in wiping out a substantial portion of what they have in liquid assets, and is going to be a big problem for them moving forward. 

So, as I mentioned at the top, if you have questions about this, or if you're in this scenario and you need to change it, please do schedule a meeting with me, or another attorney, or get some more information so that this doesn't happen to you as well. You can go to to schedule that meeting. 

If you think this information is important, if you think this information is helpful, if you think someone might benefit from hearing this, please do share this content. Whether you share this video directly, this post directly, or you just tell someone. I think it's really, really important that people understand that doing something can have consequences that are unintended. So please do share this if you think you know anyone that might benefit from it. 

Again, my name is Don Rolfe with Northwest Legal Planning. Thanks for watching, and until next time, take care. Bye.

About the Author Donald Rolfe

Father, husband, entrepreneur, and owner of a trivia filled brain. I help families and individuals plan for the unexpected and end of life. Schedule a Complimentary Strategy Session to chat with me, get answers to your questions, and find out about your Estate Plan options.

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