Tuesday, February 25, 2020

Banks vs. Lawyers: The Best Way to Access a Loved One’s Bank Account

Catherine E. Sears, Esq.

Frequently, clients tell me that they have certain assets (often, a checking or savings account) titled jointly with one or more of their children.

“This way,” they tell me, “my daughter can step in and pay my bills if something happens to me.”

Nearly always, when I ask whose idea this was, the client informs me that an employee at the bank said that this was the best way to allow family members to help in case of a crisis. However, at the risk of irritating any bankers reading this blog, I can say with complete certainty that naming someone as a co-owner is NOT the best way to give another person access to your finances. Instead, you should name your child as your agent under a Durable Power of Attorney.

When a bank account is jointly owned, legally, that bank account belongs to both of the co-owners. This means that your child can do whatever he or she wants with that money, and is not bound by any legal obligation to use the money in your best interests. Even if you trust that your child would not go on a shopping spree with your money, your account can still be subject to your child’s creditors if, for example, your child gets into a fender-bender and gets sued, or if he goes through a divorce. Additionally, co-ownership often creates a “right of survivorship.” This means that, upon your death, the entire bank account will belong to your co-owner child, regardless of the provisions in your will or revocable living trust which may state that your assets are to be divided equally among all of your children.

I recently had a client who had named her adult child as co-owner of her checking account many years ago. In fact, this happened so long ago that the bank no longer had records showing that the account had, at one time, been titled in my client’s sole name. Sometime after adding her child as co-owner, the client’s child developed a disability, could no longer work, and began receiving Supplemental Security Income (SSI) and Medicaid. Both of these programs are means-tested, which means that the child could only receive these benefit programs by meeting certain financial eligibility requirements. The child had been receiving these benefits for several years, and these programs were the child’s sole source of income and health insurance coverage.

Recently, though, the Social Security Administration learned that the child was co-owner on my client’s checking account. Though my client was by no means wealthy, she had money in the account in excess of the low limits which are required to maintain SSI and Medicaid coverage. The child’s benefits stopped, which was problematic because the child had a home-health aide, who had been paid through the Medicaid coverage, and this left my frail, eighty-something year-old client in charge of providing very physically-demanding care to the child. Additionally, the child received word that he owed tens of thousands of dollars to the Social Security Administration because, due to this co-owned account, he should never have been eligible to receive these benefits.

I was heartbroken to learn of this situation, because the family’s problems would have been solved if the client had not listened to the bank employee all those years ago and had simply executed a Durable Power of Attorney naming the child as her agent. Then, the child would not have any legal claim to the money in the client’s account. If the client had needed assistance, the child could simply have paid bills by showing a copy of the Durable Power of Attorney and by signing “Child’s Name, POA for Client’s Name.” This also would have held the child to the fiduciary standard, which means that, if he had happened to misuse the client’s money, he would have gotten in trouble for it.

So, please learn from this family’s mistake. Nobody knows what the future will hold; clearly, this client thought that she would be the first family member to need help, not her child. If you ever have any doubts about the proper way to title any type of asset, consult an experienced estate planning or elder law attorney – not just the person sitting behind the counter at the bank.

Tuesday, January 21, 2020

Happy New Year!

Barbara Armstrong

Happy New Year!

Here we are already into the middle of January. Where does time go? Before you know it, daylight savings time will be upon us, daffodils and tulips will be blooming, and of course, allergies will be thriving!

Last year was a whirlwind. The year started out uneventful, but in July, tragedy struck our family. Our youngest granddaughter nearly drowned. She was saved due to the fast work of her other grandmother, who knew CPR, the police officer that arrived next and took over, and then the EMTs. She began breathing on her own, but the prognosis wasn’t good. 

After two MRIs while at CHKD, it was discovered that she had suffered major brain damage. The little girl we knew was no longer with us. She was in CHKD in the PICU for almost two months and on a ventilator for a month. She suffered severe “storms” during this time. The doctors inserted a feeding tube. She and her family suffered greatly. 

During that time, a GoFundMe page was set up. Through the generosity of folks, her parents were able to take family leave from their full-time jobs and took turns staying with her so that one of them would always be with her and the other with the other two girls. They were able to do some remodeling so that they could bring her home when the hospital finally released her. When she was released, it was a happy day. She was smiling when she heard a familiar voice. She started tracking with her eyes. She began moving her legs and arms so much more, although she couldn’t sit up.
Fast forward to this year. Our little one is now sitting up, and the other day, tried to stand! What tenacity she has. Through the diligence of her parents, she is continuing physical therapy and was accepted into a school program which she just started this month.

Although the doctors told us that we would never have our little girl back in the way she was before the accident, we are eternally grateful for the fact that she is still with us and I truly believe that she will walk again one day and begin to dance like she used to.

A new year brings new hope! God Bless.