What’s happening with Mom’s money?

One of the questions I get (unfortunately) goes something like this: “my sister has persuaded Mom to put her on the bank account and now I can’t get any information about what’s happening with Mom’s money. Sis is telling Mom not to talk to me about anything. What can I do?”

The answer hinges on whether the elder is competent to make financial decisions — that is, her ability to understand the possible ramifications of a given financial transaction or business arrangement. Lack of competence is not the same as making a decision about which you might disagree. In the case of adding a child to a bank account, competence means whether Mom is able to understand that adding the child to the bank account exposes the funds in that account to the child’s creditors, that Massachusetts law treats the action as making a lifetime gift of an asset that would otherwise go through probate, or that the child could legally walk off with all the money at any time.

If Mom is competent, then there may be nothing which can be done except to spell out to her the ramifications of her action and see if she’ll change her mind. Competent people have the right to make bad decisions. Mom may be afraid of Bad Daughter, but as in any abusive relationship, Mom has to decide for herself if she wants to take the steps needed to detach from the abuser.  Elder Protective Services can provide assistance if Mom wants it; but if Mom is competent does not want their help, they have no legal right to act. Alternately, you might want to hire a geriatric care manager to provide Mom with nonjudgmental professional support, which could in turn help Mom develop the courage she needs to regain control over her funds.

If you believe that Mom isn’t competent, Elder Protective Services may be able intervene. If that is the case, the agency will seek protective orders asking for a competency evaluation and possibly seek to have a conservator (who may or may not be a family member) appointed. If you decide to bring a conservatorship action, and if Mom refuses to go to a doctor for an evaluation of her competency (or Bad Daughter interferes with that effort), then you can ask the judge for an order for an evaluation and another order to freeze Mom’s assets. However, be mindful that this step can inflame existing tensions. You need to decide for yourself if you are willing to live with those consequences.

To find a protective services agency in your Massachusetts community, go to http://contactus.800ageinfo.com/FindAgency.aspx

 

 

The hidden dangers of joint bank accounts

Putting your child on your bank account is easy, right? The two of you go to a bank, sign a few forms, and now your child can help you pay the bills or monitor your spending activities.

No worries, right?

Wrong.

Let’s put aside the scary — but real — possibility that your child might take the opportunity to raid your account. There are other issues which many elders do not think about when setting up a joint bank account which need to be considered.

Under Massachusetts law, the act of adding someone to your bank account is considered to be a gift the moment the two owners sign the bank’s paperwork. That means that the money is considered to belong 100% to each owner. Each owner has the right to control the asset and use it for whatever purpose he may wish.

So, a jointly owned asset is always subject to attack by the creditors of either owner. If your child is sued for some reason, your bank account could be tied up and possibly drained by someone with whom you have no legal relationship. You would be forced to go to court and hope that you can prove that the money was really yours.

Second, ownership of the account will pass to your child outside of probate. Maybe this isn’t really an issue — for example, if your child is an only child, or you REALLY want to be sure that the money goes to that child at death. But if you have more than one child and you intend your estate to be evenly divided, the fact that the account is not included with the rest of your assets may result in an uneven distribution of your assets.

In other words, let’s say you have $50,000 in your joint bank account with your daughter, Sarah. Your Will splits your estate evenly between Sarah and your son, David. Since the estate passing through the will does not include jointly held accounts, that means that Sarah would get $50,000 more than David as a result of your death.

If access by your child’s creditors or unequal distribution of your assets isn’t what you had in mind for your money, make sure that your child is listed on the bank account as a co-signatory, not a co-owner. If your child has signatory authority, then he can access your account, but does not have ownership interest. You need to be very clear with the bank that you do not want your child to own the account. You will have an easier time defending the account from your child’s creditors, because she will not be an owner and will not have the right to use the funds for herself. At your death, the account will be part of your probate estate.