Dear Mr. Premack: I have a listed one of my children on my bank accounts as "or". If he is sued, can they get at my bank accounts? – SE

When you open joint bank accounts, Texas law clearly defines the relationship that is created. It distinguishes between "ownership" of the money in the account versus "access" to the money in the account.

Listing your son on your bank account with "or" (parent or son) gives him open-ended permission to access the money in the account at any time. He can make a withdrawal and the bank will not question his authority. On the other hand, an account using "and" (parent and son) requires both of you to access the account together; the bank will not allow access to either of you without the other’s joinder.

Even when your son has access to your money with joint accounts, he may not have ownership of the money inside the accounts. State law looks to the origin of the funds to determine ownership. Any money in a joint account which came from your earnings or from other funds you accumulated is owned by you. You owned the funds before they were put into the account, so the money is your property.

Likewise, any money in a joint account which came from your son’s earnings or other funds he accumulated belongs to him. In that case, you and he have commingled your funds into the joint account. An outsider (like someone suing your son) cannot be aware of who owns the money in the account unless you establish where the money in the account originated. Consequently, if your son is sued, it is likely that you will become involved in the suit because of the joint account.

You will need to prove the funds in the account are not commingled. You may have to appear at a deposition or may have to testify in court that the funds in the account originated from your earnings or other funds belonging solely to you. Once you have proven that the money belongs to you, the accounts should be safe even if a court later finds your son has liability to the person who sued him.

Defending your accounts will be time consuming and may be expensive. If you suspect that your son is behaving in a way that makes a lawsuit against him likely, you should consider removing his name from your accounts. You put him there to enhance your safety and for your convenience. If leaving him there has the opposite effect (putting you at higher risk) then you should change the accounts.

Three ideas for changing your accounts:

1. Ask your bank if they offer "convenience accounts," which are authorized by section 438A of the Texas Probate Code. A convenience account has a primary holder and a convenience cosigner. The primary holder clearly owns all funds in the account, but the cosigner can withdraw funds. The primary can "lock out" the cosigner at any time with written instructions to the bank.

2. Change your accounts back to your name only then name your son as agent in your Durable Power of Attorney. As agent, your son may access your accounts in the same manner in which you may access them even though his name does not appear as a cosigner. Since he is no longer a cosigner, the account will not be involved if he is sued.

3. Create a living trust agreement, and assign ownership of your accounts to the trust. Name yourself as the trustee (with access to the accounts) and name your son as alternate trustee (to have access if you become incapacitated). His status as trustee makes it clear that he does not own the funds in the accounts, so they should not be vulnerable if he is sued.