Dear Quentin,
My mom recently passed away.
I have taken care of my mom’s finances for the last 10 years. It was always her money, but I made sure all her bills were paid. She lived in her own house until about 7 months ago. She then moved in with me. She was 89 years old and could not take care of herself any longer.
“ Do I need to report this to the probate lawyer? More importantly, do I need to tell my 3 siblings about the money in these accounts? ”
For the last 10 years, I have taken care of paying her bills, so mom put me on all of her checking/savings accounts. My mom trusted me to take care of all her finances as well as all aspects of her life/care, and any house repairs/problems.
As I am joint on her banking accounts, do I need to report this to the probate lawyer? More importantly, do I need to tell my 3 siblings about the money in these accounts? If I am joint on her accounts does that make me the beneficiary, and does it need to be disclosed?
My sisters are bugging me about mom’s accounts. I haven’t told them anything. Mom didn’t want me to talk to them about her money, and I never have until now. What should I do? Am I legally bound to disclose the accounts?
Thank you for your advice.
Daughter/Sister
You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com.
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Dear Daughter/Sister,
I’m sorry for your loss, and I am glad you had this time to spend with your mother, and take care of her needs. It’s not easy, and some families can take such a commitment by one child for granted. You did your mother a great service, and I hope you take solace in the fact that you did everything in your power to make her final years comfortable, and free of loneliness.
You write that your mother “put me” on these accounts and you say “I am joint” on the accounts. First off, establish whether you are a “joint owner” on these bank accounts or an “authorized signer.” There’s a big difference between the two. With the former, you are the beneficiary of these accounts, and they do not go through probate. Not so, with the latter.
“ ‘First off, establish whether you are a joint owner on these bank accounts or an authorized signer.’ ”
Let’s proceed on the basis that you are a co-owner. Given the decade-long commitment to your mother and her wish for you to keep the contents of these accounts private, I see no moral or legal imperative to acquiesce to your siblings, and give them a full forensic accounting. To what end? The only reason would be if this was their money too. It’s not.
Still, situations such as this can be tricky. “Transfers on death” are widely regarded as a more secure way of passing on bank accounts to a chosen friend or relative, and can also help avoid tax pitfalls that come with the inheritance of joint accounts. That said, transfers on death do not give third parties ownership during the person’s lifetime.
According to the National Law Review, making an adult child a joint owner of an account is regarded as the “poor man’s will” primarily because of the myriad problems that can arise over whether it was merely a convenience account set up to pay bills, but not actually meant to be left to the care giver in question. “Litigation can, and frequently does, ensue.” It poses three questions:
1. What was the source of the account? “If the deceased owner was the sole source of funding, the account is more likely to be viewed as a convenience account, with the joint designation intended merely as a means to ensure the deceased owner’s expenses were paid while he or she was alive, rather than a true joint account,” the NLR says.
2. What was the money used for? “If the account was used solely for the deceased owner’s expenses, it is more likely to be viewed as a convenience account,” it adds. “The living joint owner’s use of the account, however, is strong evidence that the deceased owner considered the account to be a ‘true’ joint account.”
“ ‘Always err on the side of transparency. That means full disclosure to the probate attorney.’ ”
3. And, finally, when was the account set up? “If the account was created long before the deceased owner’s death, it is probably easier for the living owner to argue that the deceased owner knew what he or she was doing, was less susceptible to any influence,” the publication adds. But the opposite could also be true. Therefore, any paper trails to support your case would be useful.
There are a lot of moving parts here. Always err on the side of transparency. That means full disclosure to the probate attorney. He or she can assess all the documents, and ensure that all legal issues are addressed in a fair and proper manner. Your siblings would be less likely, in theory anyway, to suspect that any undue influence or financial malfeasance has occurred.
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