Joint Accounts: Less Convenient Than You Might Think

Joint Accounts: Less Conv…

Consider this scenario:

Mom passed away in 1995. Mom is survived by Dad and their two children: Tommy and Jamie. Tommy lives close to Dad, visits him every other day, and helps Dad with shopping and other needs. Jamie lives two hours away and visits Dad once a month. Dad prepared an estate plan providing for all assets to be split equally between the children upon Dad’s passing.

After Mom passed, Dad did not want to bother with the finances and wanted help paying his bills. Because Tommy was nearby and willing to help, Dad put Tommy’s name on Dad’s checking account sometime in 1996. Tommy’s name appeared on the checks and monthly statements, and he was able to pay bills and make withdrawals or deposits as necessary. Tommy never deposited his own funds in to Dad’s checking account, and never removed funds for Tommy’s own personal use.

Dad recently passed away, leaving a house, a vehicle, and an investment account. Also left was the checking account that bore Tommy’s name. Tommy went to the bank to inform the bank that Dad had passed. The bank immediately liquidated the checking account, giving Tommy a check for roughly $200,000.

Did Tommy properly received the funds from Dad’s checking account? Yes. Tommy is presumed to be the rightful owner of the money. That being said, Jamie could successfully challenge to presumption in court. In our scenario, Tommy was not added to the account strictly as a “pay-on-death” beneficiary, which would have been a clear indication that Dad wanted him to have the funds outright. Tommy was added as a joint account owner, which gives him all the same rights and privileges as Dad. This estate planning tool becomes problematic when we do not know for certain whether Dad wanted Tommy to have all of the funds. It is possible that Dad assumed that the funds would be split equally according to his will, and if so, Dad may have unwittingly primed his estate for litigation between his children.

If Jamie has good evidence that Dad merely intended the checking account to be one of “convenience,” whereby Tommy was added solely for purposes of helping Dad pay bills, Jamie might be able to overcome the presumption that the account belongs only to Tommy. If Jamie prevails, the account would be split equally between her and Tommy, per Dad’s will.

The moral of the story is that placing a son, daughter, caretaker, or other individual on your bank account could have far-reaching implications and unnecessarily prime your estate for litigation between the heirs. There are various mechanisms available to secure assistance with finances, while at the same time safeguarding your assets so that your wishes are followed upon your death. The attorneys at Wright Beamer stand at the ready to assist you with all of your estate planning needs.

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