One of the unfortunate realities of my profession is that I don’t have to fabricate or use my vivid imagination to come up with the terrible changes and challenges that can occur in a family when a parent or grandparent passes away.
It is not unusual that as our parents or grandparents age we want to help them in any way that we can. Often times Mom or Dad can’t see as well as they once could making paying bills that much more of an effort. Maybe their handwriting isn’t as legible and it looks like a spider ran through an ink spill and then scampered across the check. Maybe it’s the difficulty in understanding the monthly bank statements, doing the math or getting it all to balance that truly frustrates them.
So what do many do? They take Mom or Dad down to the bank and tell the very kind banker that they want to be able to pay Mom or Dad’s bills. They want to be able to transfer money from the savings account to the checking account when necessary. And they want to do this without having to bring Mom or Dad into the bank each time. They want to do all of this to help out and to make life easier for their loved one.
“Not a problem”, says the kindly banker, also in an effort to help out and make life easier says. “OK, Mrs. Mom or Mr. Dad I will add your child to the account. Just sign here.” And it’s done. “See, that was easy!” with smiles all around.
Unfortunately, in an effort to also make the banker’s life also easier he or she added the child as a Joint Tenant to the accounts. Essentially he made the child an owner of the account.
The simple explanation of joint tenancy is “Last man standing takes all.” That means that when Mom dies the accounts belong to the child.
What the banker failed to do, mostly because it entails more time and effort and he or she doesn’t want to inconvenience the customer, is contact the banks legal department and place the child on as a signer on the account…ONLY. Not a co-owner of the account. Sure it’s a little more effort but well worth it in the long run.
A real life story of just this situation is Mary, Jim and Sally (not their real names). Mary, Jim and Sally are the children of Margaret Rouch (also not her real name). Mrs. Rouch was in her mid-80’s and life was becoming a bit confusing. Mary, Jim and Sally discussed their mother’s troubles with handling virtually everything that dealt with keeping her finances in order. The three of them then discussed this with their mother. They all agreed that since Mary was retired, lived only a few blocks from Mom and had the time, Mary would be the one to help with bill paying and the like.
So…I know you can see this coming…Mary went to the bank with her mother and was put on the accounts as a Joint Tenant. Neither Mrs. Rouch nor any of the children ever intended for Mary to become an owner of the accounts.
Unfortunately about 19 months later Mrs. Rouch passed away. She left an estate plan that left everything equally to her three children. Also unfortunately a major portion of her estate was in the accounts that Mary now owned. A disagreement between the siblings ensued. It really doesn’t matter what the argument was about. The final result was that Mary decided that the money in the accounts was now hers and that she didn’t have to share with her brother and sister. And she was right!
Many of you may say, “Yeah, well Jim and Sally could sue Mary.” And you would also be right. Anyone can sue anyone for anything. But litigation is expensive and the outcome is never certain. It has been quoted to me on more than one occasion, “Is the juice worth the squeeze?” In other words is the gamble on the outcome and the cost to get to that point worth what MIGHT be recovered.
The takeaway from this lesson is the easiest way is not always the best way. Be aware of what you or Mom or Dad may be giving away. Plan ahead so that you avoid the squeeze in order to get the juice.