Undo Joint Account with Parents?

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ElwoodBlues
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Undo Joint Account with Parents?

Post by ElwoodBlues » Fri Jul 19, 2019 9:27 am

Ok, looks like I may have accidentally goofed this up. At my father's request, we added me to their bank accounts for all the typical reasons (monitoring for issues, assist with paying bills once he's no longer able, etc.). Now I read that this can be a bad thing, as it may imply gift taxes. :oops:

After a few Google searches, it seems there are a lot of variables to this, and many of the articles are not clear on exactly when there is a tax liability, or how to do it properly so there is not. My sense is the devil is in the details, such as how you are listed on the account (JTWROS or other?), what state you are in, how much is in the account, etc. Also, I assume Power of Attorney should figure in somehow, but I'm not sure if we had to actually file that with the bank or not.

1. Can anyone point me to some better explanations of how this all works?

2. What do I need to ask the bank to confirm how it was setup?

3. If this was not setup correctly, is the damage already done from a tax perspective, or if it is modified or undone before the end of the year, is it ok?

niceguy7376
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Re: Undo Joint Account with Parents?

Post by niceguy7376 » Fri Jul 19, 2019 9:38 am

What account(s) did you do this process?
What state are you in?

If it is just a bank account with minimal (less than 6 digits) amounts, then there is no issue and you can live with it.

Anyway, the general recommendation is to have POA type access for big amount accounts.

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dm200
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Re: Undo Joint Account with Parents?

Post by dm200 » Fri Jul 19, 2019 9:47 am

ElwoodBlues wrote:
Fri Jul 19, 2019 9:27 am
Ok, looks like I may have accidentally goofed this up. At my father's request, we added me to their bank accounts for all the typical reasons (monitoring for issues, assist with paying bills once he's no longer able, etc.). Now I read that this can be a bad thing, as it may imply gift taxes. :oops:
After a few Google searches, it seems there are a lot of variables to this, and many of the articles are not clear on exactly when there is a tax liability, or how to do it properly so there is not. My sense is the devil is in the details, such as how you are listed on the account (JTWROS or other?), what state you are in, how much is in the account, etc. Also, I assume Power of Attorney should figure in somehow, but I'm not sure if we had to actually file that with the bank or not.

1. Can anyone point me to some better explanations of how this all works?

2. What do I need to ask the bank to confirm how it was setup?

3. If this was not setup correctly, is the damage already done from a tax perspective, or if it is modified or undone before the end of the year, is it ok?
While there may be many reasons why (especially large balance) bank accounts should not be set up as joint with parent(s), I cannot see a tax issue for the OP in the situation described here.

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dm200
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Re: Undo Joint Account with Parents?

Post by dm200 » Fri Jul 19, 2019 9:54 am

Here is an example (happened to my wife and sister and their mother) -

My late mother in law had a modest amount of assets. About half was in bank accounts and the other half in a mortgage carried back when her late husband sold his small business.

For convenience, my late MIL added her daughter (my wife's sister) as joint on the bank accounts, since my wife's sister lived near he mother and we lived a long distance away.

It was in my late MIL's desire and in her will that her assets be split equally between her two daughters.

Then my MIL died. According to the "letter" of the account setup and the will, my wife's sister would get the full balance of the bank account(s) as joint owner and 1/2 of the other asset (mortgage on business). So, then, my wife would have received 1/4 of her mother's assets and her sister 3/4.

HOWEVER, my wife's sister understood her mother's intent and told the estate attorney to split everything 50/50 - and it worked out.

Not all such situations work out this well.

straws46
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Re: Undo Joint Account with Parents?

Post by straws46 » Fri Jul 19, 2019 10:06 am

Treas. Reg. § 25.2511-1(h)(4) spells it out clearly: With bank accounts and most brokerage accounts that call for the registration of securities in “street name,” Dad will not have made a reportable gift if he simply adds Junior’s name as a joint owner. Reportable gift transfers occur only if Junior starts to draw funds from those accounts for his personal use (Revenue Ruling 69-148). But with other assets, including a business or even a personal residence, if Dad makes Junior a joint owner, a gift will be deemed to have occurred immediately, and a gift return will probably have to be filed for the year the joint tenancy was created (Treas. Reg. § 25.2511-1(h)(5)).

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Re: Undo Joint Account with Parents?

Post by Katietsu » Fri Jul 19, 2019 10:18 am

I would not be stressed about it. It is probably fine. Many people just add the adult child as another account owner with no negative consequences. However, there can be unintended consequences or complications when done this way. That is why it is “cleaner”, and usually preferred, to leave the accounts in your parents’ names and to have you be given power of attorney. If things at at the point where Dad is OK with you being added, then you should have a power of attorney in place regardless. If you were added to the accounts, hopefully, you can just be removed and instead establish the POA relationship. I say hopefully because I have had one bank anyway that will not remove a name from an account and requires a new account established with new account numbers, checks etc instead.

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dm200
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Re: Undo Joint Account with Parents?

Post by dm200 » Fri Jul 19, 2019 10:21 am

Katietsu wrote:
Fri Jul 19, 2019 10:18 am
I would not be stressed about it. It is probably fine. Many people just add the adult child as another account owner with no negative consequences. However, there can be unintended consequences or complications when done this way. That is why it is “cleaner”, and usually preferred, to leave the accounts in your parents’ names and to have you be given power of attorney. If things at at the point where Dad is OK with you being added, then you should have a power of attorney in place regardless. If you were added to the accounts, hopefully, you can just be removed and instead establish the POA relationship. I say hopefully because I have had one bank anyway that will not remove a name from an account and requires a new account established with new account numbers, checks etc instead.
One "convenience" situation that cannot be done with a POA is the death of the parent, since a POA ceases at the death of the grantor. I suspect that it might make the most sense to be joint on account(s) of modest/small balances - and use a POA for others.

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ElwoodBlues
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Re: Undo Joint Account with Parents?

Post by ElwoodBlues » Fri Jul 19, 2019 10:30 am

niceguy7376 wrote:
Fri Jul 19, 2019 9:38 am
What account(s) did you do this process?
What state are you in?

If it is just a bank account with minimal (less than 6 digits) amounts, then there is no issue and you can live with it.

Anyway, the general recommendation is to have POA type access for big amount accounts.
Checking, Savings, and several CD's I think. I haven't confirmed since I didn't want to move forward on actually getting on line access or statements until I understand this better.

Since my original post, I have confirmed there is no state gift tax in my case, so it would just be a federal concern, which would be tax on anything above the $15K annual exemption if I understand correctly.

Also, just ran across this on https://turbotax.intuit.com/tax-tips/es ... /L1sFpFeXV

"In addition to these gifts that are not taxable, there are some transactions that are not considered gifts and, therefore, are definitely not taxable gifts.
  • Adding a joint tenant to a bank or brokerage account or to a U.S. Savings Bond. This is not considered to be a gift until the new joint tenant withdraws funds. On the other hand, if you purchased a security in the names of the joint owners, rather than holding it in street name by the brokerage firm, the transaction would count as a gift.
"

So maybe this is ok for the intended purpose, as long as there no reason I would need actually be withdrawing large amounts?

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ElwoodBlues
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Re: Undo Joint Account with Parents?

Post by ElwoodBlues » Fri Jul 19, 2019 10:40 am

Katietsu wrote:
Fri Jul 19, 2019 10:18 am
I would not be stressed about it. It is probably fine. Many people just add the adult child as another account owner with no negative consequences. However, there can be unintended consequences or complications when done this way. That is why it is “cleaner”, and usually preferred, to leave the accounts in your parents’ names and to have you be given power of attorney. If things at at the point where Dad is OK with you being added, then you should have a power of attorney in place regardless. If you were added to the accounts, hopefully, you can just be removed and instead establish the POA relationship. I say hopefully because I have had one bank anyway that will not remove a name from an account and requires a new account established with new account numbers, checks etc instead.
From the bank's perspective, is there any difference between having POA or not in terms of how they setup account access? Is POA merely a factor in determining if larger withdrawals constitute trigger gift tax liability?

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dm200
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Re: Undo Joint Account with Parents?

Post by dm200 » Fri Jul 19, 2019 10:46 am

ElwoodBlues wrote:
Fri Jul 19, 2019 10:40 am
Katietsu wrote:
Fri Jul 19, 2019 10:18 am
I would not be stressed about it. It is probably fine. Many people just add the adult child as another account owner with no negative consequences. However, there can be unintended consequences or complications when done this way. That is why it is “cleaner”, and usually preferred, to leave the accounts in your parents’ names and to have you be given power of attorney. If things at at the point where Dad is OK with you being added, then you should have a power of attorney in place regardless. If you were added to the accounts, hopefully, you can just be removed and instead establish the POA relationship. I say hopefully because I have had one bank anyway that will not remove a name from an account and requires a new account established with new account numbers, checks etc instead.
From the bank's perspective, is there any difference between having POA or not in terms of how they setup account access? Is POA merely a factor in determining if larger withdrawals constitute trigger gift tax liability?
When a POA is used to withdraw funds, I do not believe banks or credit unions monitor or report anything related to gift taxes, etc.

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Re: Undo Joint Account with Parents?

Post by bsteiner » Fri Jul 19, 2019 11:12 am

Joint accounts lead to litigation over whether they were intended to go to the surviving joint owner, or whether the other person was added just for convenience.

As has been pointed out, in most states, during lifetime as between the parties a joint account belongs to the one who contributed the money (though the financial institution may pay to either of them), so there's no gift upon creation of the joint account. However, in New York, there's a presumption that the account immediately belongs equally to the joint owners, so there would be a gift. Of course, this tends to lead to litigation as to whether each party may withdraw his/her share.

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Re: Undo Joint Account with Parents?

Post by Gnirk » Fri Jul 19, 2019 12:37 pm

My mother added my name to one of her checking accounts, so that I could easily pay her bills when she became unable to do so. After her death, I used that account to pay for her estate expenses and taxes. I then split the remainder 50/50 with the other heir because her will instructed that her estate should be split 50/50. I could not imagine doing anything else.

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Re: Undo Joint Account with Parents?

Post by dbr » Fri Jul 19, 2019 12:45 pm

Doesn't this mean the father could lose everything in the account if the son had a judgement against him or had assets seized in a tax action?

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Re: Undo Joint Account with Parents?

Post by bsteiner » Fri Jul 19, 2019 12:46 pm

Gnirk wrote:
Fri Jul 19, 2019 12:37 pm
My mother added my name to one of her checking accounts, so that I could easily pay her bills when she became unable to do so. After her death, I used that account to pay for her estate expenses and taxes. I then split the remainder 50/50 with the other heir because her will instructed that her estate should be split 50/50. I could not imagine doing anything else.
Many joint owners do imagine something else, and it becomes a point of contention in many estates where the other joint owner says it's his/hers and the other children say it should be an asset of the estate.

If it's just a small checking account to pay household bills it's less likely to become an issue, but if it's for larger accounts not used to pay household bills it's more likely to become an issue.

mptfan
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Re: Undo Joint Account with Parents?

Post by mptfan » Fri Jul 19, 2019 12:49 pm

ElwoodBlues wrote:
Fri Jul 19, 2019 10:30 am
Since my original post, I have confirmed there is no state gift tax in my case, so it would just be a federal concern, which would be tax on anything above the $15K annual exemption if I understand correctly.
No, that is not correct. The $15k annual exemption is an exemption from the need to file a gift tax return, it is not an exemption from tax. Unless the estate is over $11 million dollars, no estate tax is owed.

viewtopic.php?t=277333

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ElwoodBlues
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Re: Undo Joint Account with Parents?

Post by ElwoodBlues » Fri Jul 19, 2019 2:23 pm

mptfan wrote:
Fri Jul 19, 2019 12:49 pm
ElwoodBlues wrote:
Fri Jul 19, 2019 10:30 am
Since my original post, I have confirmed there is no state gift tax in my case, so it would just be a federal concern, which would be tax on anything above the $15K annual exemption if I understand correctly.
No, that is not correct. The $15k annual exemption is an exemption from the need to file a gift tax return, it is not an exemption from tax. Unless the estate is over $11 million dollars, no estate tax is owed.

viewtopic.php?t=277333
Can you explain further? That sounds different (backwards?) from what I read here: https://turbotax.intuit.com/tax-tips/es ... /L1sFpFeXV

" Why it pays to understand the federal gift tax law

If you give people a lot of money or property, you might have to pay a federal gift tax. But most gifts are not subject to the gift tax. For instance, you can give up to the annual exclusion amount ($15,000 in 2018) to any number of people every year, without facing any gift taxes. Recipients generally never owe income tax on the gifts.

In addition to the annual gift amount, your can give a total of up to $11.180 million in 2018 in your lifetime before you start owing the gift tax. If you give $17,000 each to ten people in 2018, for example, you'd use up $20,000 of your $11.180 million lifetime tax-free limit—ten times the $2,000 by which your $17,000 gifts exceed the $15,000 per-person annual gift-free amount for 2018.
"

If I'm follow that example correctly, each of the ten gift recipients equates to $2K over the $15K individual annual gift amount, so 10 people x $2K = $20K that you would owe tax on, but then you can elect to count the $20K overage against the $11.8M lifetime tax-free limit. So I guess that means the giver owes nothing, but would file something on their tax return to make a record of using part of the lifetime limit?

I may have hijacked my own thread by going further down the gift tax rabbit hole beyond the points of my original question, but it sounds like something I need to understand better in general anyhow.

Bringing it back to the case at hand, and citing the other section I posted earlier from that same URL, it sounds like with the father/son joint account, if their was up to $15K withdrawn by the son, there is no gift tax and no need to file. Beyond that, the father would either pay tax on the amount above $15K, or declare it as part of his $11.8M lifetime tax-free limit, and either way the father would have to file something with the IRS?

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Re: Undo Joint Account with Parents?

Post by dbr » Fri Jul 19, 2019 3:15 pm

Yes, if he exceeds the gift tax exclusion he is supposed to file for purposes of establishing a record against the lifetime gift and estate tax exemption. He would certainly not pay anything now or almost certainly ever.

I don't think gift tax is where you should be focusing your concern here. For purposes of helping him manage his money it would be more appropriate for him to grant you power of attorney. In the particular case of the bank account the bank may want you both to come in and do it on their form. The POA can be restricted to that account only. I hold a POA like that for a family member so that I can write checks on their behalf and so that I can see what is happening in the account. I don't own any of the money. For purposes of inheritance the owner of the account can make a Pay on Death designation or deal with the issue in a will.

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Re: Undo Joint Account with Parents?

Post by mptfan » Fri Jul 19, 2019 3:42 pm

dbr wrote:
Fri Jul 19, 2019 3:15 pm
Yes, if he exceeds the gift tax exclusion he is supposed to file for purposes of establishing a record against the lifetime gift and estate tax exemption. He would certainly not pay anything now or almost certainly ever.
This. Many people get confused by the annual $15k gift tax exclusion, and they assume that if they gift more than that amount in a year they have to pay gift tax. This is wrong.

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Re: Undo Joint Account with Parents?

Post by dbr » Fri Jul 19, 2019 3:49 pm

Read here why not joint accounts and better ideas: https://www.bankrate.com/finance/saving ... nts-1.aspx

Note special emphasis on law suits and divorces.

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Re: Undo Joint Account with Parents?

Post by bsteiner » Fri Jul 19, 2019 3:50 pm

dbr wrote:
Fri Jul 19, 2019 3:49 pm
Read here why not joint accounts and better ideas: https://www.bankrate.com/finance/saving ... nts-1.aspx

Note special emphasis on law suits and divorces.
We were recently involved in an intra-family dispute over joint accounts, which resulted in several hundred thousand dollars of legal fees.

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Re: Undo Joint Account with Parents?

Post by NMBob » Fri Jul 19, 2019 10:01 pm

there is a difference between an 'authorized signer' as opposed to a 'joint owner.' i would think most situations would be better off simply being authorized signers, who may write checks for the actual owners benefit, and then the inheritors of the checking account being listed on the accounts tod/pod paperwork .

when the account is jointly owned, doesn't it just expose the account to more possible bankruptcy or lawsuit claims etc. ? i would never want my siblings listed as joint owners as opposed to signers on my mothers account. One for sure never, the other likely would be ok but I can't guarantee what her and her husband's own true financial situation is.

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Re: Undo Joint Account with Parents?

Post by Peter Foley » Fri Jul 19, 2019 11:04 pm

In Minnesota, and perhaps a number of other states, one can set up a joint bank account "for convenience." My wife did this with her mother after her father passed.

I advised my wife not to set up a regular joint account. My thought was, as the account has a significant balance, I did not want my wife to be in a position of gifting money to her siblings as per the division of assets detailed in her mother's will.

Perhaps I was being overly cautious. Minnesota had both a gift tax and an estate tax with a low threshold at the time.

HereToLearn
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Re: Undo Joint Account with Parents?

Post by HereToLearn » Fri Jul 19, 2019 11:12 pm

dm200 wrote:
Fri Jul 19, 2019 10:21 am
Katietsu wrote:
Fri Jul 19, 2019 10:18 am
I would not be stressed about it. It is probably fine. Many people just add the adult child as another account owner with no negative consequences. However, there can be unintended consequences or complications when done this way. That is why it is “cleaner”, and usually preferred, to leave the accounts in your parents’ names and to have you be given power of attorney. If things at at the point where Dad is OK with you being added, then you should have a power of attorney in place regardless. If you were added to the accounts, hopefully, you can just be removed and instead establish the POA relationship. I say hopefully because I have had one bank anyway that will not remove a name from an account and requires a new account established with new account numbers, checks etc instead.
One "convenience" situation that cannot be done with a POA is the death of the parent, since a POA ceases at the death of the grantor. I suspect that it might make the most sense to be joint on account(s) of modest/small balances - and use a POA for others.
That is what I did with my mother's account. I was joint on her checking & savings and POA on her brokerage. She had too much cash sitting in her checking & savings, so, with her permission, I transferred it over to her brokerage. When she died, I used the money in the joint account to pay all estate expenses. I suppose by rights that money was mine, but I know that is not what she intended.

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Re: Undo Joint Account with Parents?

Post by GMCZ71 » Sat Jul 20, 2019 8:48 am

ElwoodBlues wrote:
Fri Jul 19, 2019 9:27 am
goofed this up. At my father's request, we added me to their bank accounts for all the typical reasons (monitoring for issues, assist with paying bills once he's no longer able, etc.).
We did the same thing, Father was terminal and added me to both banks and all accounts. We started thinking/googling as you did and after his death and dealing with the lawyer we changed to poa and tod on the bank accounts. The big reasons were liability if I was sued or divorce and taxes if I died before Mother. If I passed or sued is my net worth 10 times larger than it really is?

Best to check with lawyer.
John

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ElwoodBlues
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Re: Undo Joint Account with Parents?

Post by ElwoodBlues » Sun Jul 21, 2019 9:09 am

NMBob wrote:
Fri Jul 19, 2019 10:01 pm
there is a difference between an 'authorized signer' as opposed to a 'joint owner.' i would think most situations would be better off simply being authorized signers, who may write checks for the actual owners benefit, and then the inheritors of the checking account being listed on the accounts tod/pod paperwork .

when the account is jointly owned, doesn't it just expose the account to more possible bankruptcy or lawsuit claims etc. ? i would never want my siblings listed as joint owners as opposed to signers on my mothers account. One for sure never, the other likely would be ok but I can't guarantee what her and her husband's own true financial situation is.
Ah...thanks for that. I think 'authorized signer' was the term I was missing. I have POA (although I am new to that and have never actually exercised it), but I think I need to confirm if I was added to the bank accounts as 'joint owner' or 'authorized signer'.

Also, having the correct terminology led me to better search results, so I thought I'd share this for future forum users tackling this issue:
https://mcandrewslaw.com/publications-a ... -finances/
Some of it is specific to Pennsylvania, which doesn't apply to my situation, but the explanation of the distinctions between the methods was pretty good.

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Re: Undo Joint Account with Parents?

Post by dbr » Sun Jul 21, 2019 10:07 am

Remember if you "have POA" you still have to present that at the bank before they actually implement any authority you might have to write checks and see the account. Sometimes banks or any other institution you work with insist on having their own form signed by the original grantor.

I sure wish people would not use language like "added to the account" as that is ambiguous.

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Re: Undo Joint Account with Parents?

Post by bsteiner » Sun Jul 21, 2019 10:12 am

ElwoodBlues wrote:
Sun Jul 21, 2019 9:09 am
...
Also, having the correct terminology led me to better search results, so I thought I'd share this for future forum users tackling this issue:
https://mcandrewslaw.com/publications-a ... -finances/
Some of it is specific to Pennsylvania, which doesn't apply to my situation, but the explanation of the distinctions between the methods was pretty good.
While not completely correct it's a pretty good article. It points out a benefit of joint accounts -- in Pennsylvania after a year only a pro rata portion is subject to Pennsylvania inheritance tax.

But it's still usually preferable (perhaps with the exception of a small checking account for the payment of household bills) to have accounts pass under the Will so they'll go in a way consistent with the estate plan, including in many cases to the children in trust rather than outright.

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Re: Undo Joint Account with Parents?

Post by ElwoodBlues » Sun Jul 21, 2019 10:32 am

bsteiner wrote:
Sun Jul 21, 2019 10:12 am

While not completely correct it's a pretty good article. ...
Which part isn't completely correct? (Unless it's the state-specific part, which I'm not interested in.)

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Re: Undo Joint Account with Parents?

Post by HereToLearn » Sun Jul 21, 2019 10:39 am

GMCZ71 wrote:
Sat Jul 20, 2019 8:48 am
ElwoodBlues wrote:
Fri Jul 19, 2019 9:27 am
goofed this up. At my father's request, we added me to their bank accounts for all the typical reasons (monitoring for issues, assist with paying bills once he's no longer able, etc.).
We did the same thing, Father was terminal and added me to both banks and all accounts. We started thinking/googling as you did and after his death and dealing with the lawyer we changed to poa and tod on the bank accounts. The big reasons were liability if I was sued or divorce and taxes if I died before Mother. If I passed or sued is my net worth 10 times larger than it really is?

Best to check with lawyer.
My mother has died, so I am no longer concerned about the liability, but in case this same situation should arise with siblings' parents, can you explain the liability associated with being joint owner on a checking or savings account? Thanks!

dbr
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Re: Undo Joint Account with Parents?

Post by dbr » Sun Jul 21, 2019 10:44 am

If you are sued the person suing you could take all the money in the joint account. In case of a divorce your spouse could claim a share of the joint account in the divorce settlement. To the plaintiff against you in liability or divorce your parent's money now becomes available as if it were yours. There may be technical exceptions in some states or cases. An attorney should be consulted if this is a real case.

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Re: Undo Joint Account with Parents?

Post by HereToLearn » Sun Jul 21, 2019 10:55 am

dbr wrote:
Sun Jul 21, 2019 10:44 am
If you are sued the person suing you could take all the money in the joint account. In case of a divorce your spouse could claim a share of the joint account in the divorce settlement. To the plaintiff against you in liability or divorce your parent's money now becomes available as if it were yours. There may be technical exceptions in some states or cases. An attorney should be consulted if this is a real case.
Thank you!

So, the concern would be for the elderly parent's money, not the child who is on the account as joint? Would that liability extend to money not in the joint account? I was joint owner on my mother's local bank account, but POA on her brokerage. I kept the local bank balance fairly low. If someone had sued me (or divorce), would the liability only extend to the amount in that joint account?

Is there any way that someone who sued my mother could have a claim against my assets?

My mother has died, so this is all hypothetical.

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Re: Undo Joint Account with Parents?

Post by HomeStretch » Sun Jul 21, 2019 11:14 am

Modify the arrangement with your parents’ accounts if necessary but make sure whatever you end up with works.

I am a joint account holder on parent’s checking account and have POA for their brokerage account. At their request, I handle their finances including bill pay and investments as they are no longer able to do it themselves.

BofA refused to add me as an authorized signer on a personal account (would only do it for BofA business accounts) so ended up with the joint account. I maintain $20k in checking account and balance in brokerage account. If there is any money in the account when they pass, it will be used for final arrangements, etc. with any remainder split equally with siblings. Siblings are fine with this and I have been transparent about the financial setup. Luckily we are all close so no issues.

Edited for typo
Last edited by HomeStretch on Sun Jul 21, 2019 2:58 pm, edited 1 time in total.

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Re: Undo Joint Account with Parents?

Post by bsteiner » Sun Jul 21, 2019 2:08 pm

ElwoodBlues wrote:
Sun Jul 21, 2019 10:32 am
bsteiner wrote:
Sun Jul 21, 2019 10:12 am

While not completely correct it's a pretty good article. ...
Which part isn't completely correct? (Unless it's the state-specific part, which I'm not interested in.)
"Changing an account from individual ownership to joint ownership means that all joint owners are considered equal owners of the account, regardless of who actually contributed money to the account." It's correct in New York but not in most or perhaps all other states. In most or all other states, while the bank is protected if they pay to any of the owners, as between or among the owners the money belongs to the one who contributed the money, at least during his/her lifetime.

We just finished a litigation over some joint accounts. The parties spent several hundred thousand dollars in legal fees.

dbr
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Re: Undo Joint Account with Parents?

Post by dbr » Sun Jul 21, 2019 6:10 pm

HomeStretch wrote:
Sun Jul 21, 2019 11:14 am
Modify the arrangement with your parents’ accounts if necessary but make sure whatever you end up with works.

I am a joint account holder on parent’s checking account and have POA for their brokerage account. At their request, I handle their finances including bill pay and investments as they are no longer able to do it themselves.

BofA refused to add me as an authorized signer on a personal account (would only do it for BofA business accounts) so ended up with the joint account. I maintain $20k in checking account and balance in brokerage account. If there is any money in the account when they pass, it will be used for final arrangements, etc. with any remainder split equally with siblings. Siblings are fine with this and I have been transparent about the financial setup. Luckily we are all close so no issues.

Edited for typo
Do you mean they refused to honor your parents appointment of you as POA on the personal account or that they refused to honor an in-hand durable power of attorney with no limitations that you have already been granted by your parents?

HomeStretch
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Re: Undo Joint Account with Parents?

Post by HomeStretch » Sun Jul 21, 2019 6:33 pm

dbr wrote:
Sun Jul 21, 2019 6:10 pm
HomeStretch wrote:
Sun Jul 21, 2019 11:14 am
Modify the arrangement with your parents’ accounts if necessary but make sure whatever you end up with works.

I am a joint account holder on parent’s checking account and have POA for their brokerage account. At their request, I handle their finances including bill pay and investments as they are no longer able to do it themselves.

BofA refused to add me as an authorized signer on a personal account (would only do it for BofA business accounts) so ended up with the joint account. I maintain $20k in checking account and balance in brokerage account. If there is any money in the account when they pass, it will be used for final arrangements, etc. with any remainder split equally with siblings. Siblings are fine with this and I have been transparent about the financial setup. Luckily we are all close so no issues.

Edited for typo
Do you mean they refused to honor your parents appointment of you as POA on the personal account or that they refused to honor an in-hand durable power of attorney with no limitations that you have already been granted by your parents?
We went into their local branch with an attorney-prepared executed original DPOA naming me. The bank would not guarantee any paper checks on parents’ joint account bearing my signature would be accepted by the payee or honored by the bank as my name was not printed on the check. I suggested the checks be printed with “attorney-in-fact” or “authorized signer” appearing above or below the signature line. We were told it isn’t done for personal accounts. My parents didn’t want to switch banks (SS direct deposits etc. would need to be changed). So we took the path of least resistance and added my name to the account which has a small balance. It worked out fine in our case.

dbr
Posts: 29798
Joined: Sun Mar 04, 2007 9:50 am

Re: Undo Joint Account with Parents?

Post by dbr » Sun Jul 21, 2019 6:40 pm

HomeStretch wrote:
Sun Jul 21, 2019 6:33 pm
dbr wrote:
Sun Jul 21, 2019 6:10 pm
HomeStretch wrote:
Sun Jul 21, 2019 11:14 am
Modify the arrangement with your parents’ accounts if necessary but make sure whatever you end up with works.

I am a joint account holder on parent’s checking account and have POA for their brokerage account. At their request, I handle their finances including bill pay and investments as they are no longer able to do it themselves.

BofA refused to add me as an authorized signer on a personal account (would only do it for BofA business accounts) so ended up with the joint account. I maintain $20k in checking account and balance in brokerage account. If there is any money in the account when they pass, it will be used for final arrangements, etc. with any remainder split equally with siblings. Siblings are fine with this and I have been transparent about the financial setup. Luckily we are all close so no issues.

Edited for typo
Do you mean they refused to honor your parents appointment of you as POA on the personal account or that they refused to honor an in-hand durable power of attorney with no limitations that you have already been granted by your parents?
We went into their local branch with an attorney-prepared executed original DPOA naming me. The bank would not guarantee any paper checks on parents’ joint account bearing my signature would be accepted by the payee or honored by the bank as my name was not printed on the check. I suggested the checks be printed with “attorney-in-fact” or “authorized signer” appearing above or below the signature line. We were told it isn’t done for personal accounts. My parents didn’t want to switch banks (SS direct deposits etc. would need to be changed). So we took the path of least resistance and added my name to the account which has a small balance. It worked out fine in our case.
Wow, when I needed to do this exercise with a family member we sat down together at the bank, the account executive pulled out a stock durable POA form for our state, excluded everything except POA over that particular checking account and had my family member sign it. I have checks labeled:

Family Member
Me, POA
Address etc.

and I sign them "Me, POA" and I have never had a check declined in years. Also, on the spot that account was set to appear along with all my other accounts on-line at that bank and I can transfer money back and forth as if it were my own account.

TN_Boy
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Joined: Sat Jan 17, 2009 12:51 pm

Re: Undo Joint Account with Parents?

Post by TN_Boy » Sun Jul 21, 2019 7:29 pm

HomeStretch wrote:
Sun Jul 21, 2019 6:33 pm
dbr wrote:
Sun Jul 21, 2019 6:10 pm
HomeStretch wrote:
Sun Jul 21, 2019 11:14 am
Modify the arrangement with your parents’ accounts if necessary but make sure whatever you end up with works.

I am a joint account holder on parent’s checking account and have POA for their brokerage account. At their request, I handle their finances including bill pay and investments as they are no longer able to do it themselves.

BofA refused to add me as an authorized signer on a personal account (would only do it for BofA business accounts) so ended up with the joint account. I maintain $20k in checking account and balance in brokerage account. If there is any money in the account when they pass, it will be used for final arrangements, etc. with any remainder split equally with siblings. Siblings are fine with this and I have been transparent about the financial setup. Luckily we are all close so no issues.

Edited for typo
Do you mean they refused to honor your parents appointment of you as POA on the personal account or that they refused to honor an in-hand durable power of attorney with no limitations that you have already been granted by your parents?
We went into their local branch with an attorney-prepared executed original DPOA naming me. The bank would not guarantee any paper checks on parents’ joint account bearing my signature would be accepted by the payee or honored by the bank as my name was not printed on the check. I suggested the checks be printed with “attorney-in-fact” or “authorized signer” appearing above or below the signature line. We were told it isn’t done for personal accounts. My parents didn’t want to switch banks (SS direct deposits etc. would need to be changed). So we took the path of least resistance and added my name to the account which has a small balance. It worked out fine in our case.
Like dbr, I'm surprised. With two different banks (in two different states) albeit nether BofA, I went in with the relative for which I had a durable POA*, we showed them the paperwork, and they did the bank-specific things allowing me to write checks (I sign them TN_Boy, PA) where PA is personal agent. So I'm on the account as a "personal agent" but do not own the money in that account. The checks DO have me listed as PA.

This seems clearly the the clean way to do things, so I'd certainly advise people to take that route versus being a joint owner (and of course bsteiner has written examples in this thread of how joint ownership can go wrong).

This link:

https://www.linkedin.com/pulse/power-at ... stin-elder

has some discussion around banks and POAs that seems relevant to the issue Homestretch hit. In particular, it appears the local branch manager may be the decision maker on allowing POAs. Note also the "age problem" with POAs, which I have run into once.

(Slight tangent). Do note that I found that all my relative's financial institutions required steps beyond showing them a durable POA before I could legally do things with the accounts. And that took time. I mention this because I have seen threads where people say 'I've got a POA ready for so and so to take over if I have problems, but that ain't going to work if the POA needs to act quickly when taking over.

* it probably gets more complicated if you had a springing power of attorney versus durable power of attorney. Which did you have? From the DPOA, I assume durable ....

dbr
Posts: 29798
Joined: Sun Mar 04, 2007 9:50 am

Re: Undo Joint Account with Parents?

Post by dbr » Sun Jul 21, 2019 7:41 pm

TN_Boy wrote:
Sun Jul 21, 2019 7:29 pm

(Slight tangent). Do note that I found that all my relative's financial institutions required steps beyond showing them a durable POA before I could legally do things with the accounts. And that took time. I mention this because I have seen threads where people say 'I've got a POA ready for so and so to take over if I have problems, but that ain't going to work if the POA needs to act quickly when taking over.
Right. In our case we didn't have a POA already in place. We executed a POA in person the way that bank wanted it done. A major difference is that the grantor is physically present and the bank official is also the notary for the signature.

HomeStretch
Posts: 1175
Joined: Thu Dec 27, 2018 3:06 pm

Re: Undo Joint Account with Parents?

Post by HomeStretch » Sun Jul 21, 2019 7:46 pm

Durable POA. Like you and dbr, I was surprised the bank was so difficult about the DPOA and refused to do a medallion guarantee for parents’ new Vanguard accounts setup. My parents health issues and moving away from an expensive financial advisor were more immediate concerns so we did what was simplest and fastest at the time. Luckily it has worked out.

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