Category Archives: Asset Protection

Why is it not a good idea for adult children to put their names on their parents’ bank accounts?

It is fairly common for an aging parent to add a child’s name (sometimes more than one child) as a joint owner on the parent’s bank accounts.  The arrangement is usually viewed as a simple and inexpensive solution to the following concerns:

  • Someone needs to be able to pay bills when the parent is ill or hospitalized;
  • Funerals are expensive and money will be needed immediately;
  • The account will otherwise go to probate upon the parent’s death;
  • Probate is expensive and time consuming; and
  • Estate planning involves costly attorneys and fancy legal documents.

Many people are not aware of the hidden problems and risks that come with this arrangement.  What seems like a practical and inexpensive solution may actually create financial complications and ignite family conflicts.   Here are some reasons NOT to add a child’s name to a bank account:

  1. Loss of control – Adding a joint owner means the parent loses sole control of the account. Some parents are shocked to discover they are unable to remove the child’s name from the account without the child’s consent. This is a problem if the relationship sours or the child uses the money in a way the parent doesn’t like.
  2. Invitation to child’s creditors – Adding a child to an account gives the child ownership, not just access. Because the child has ownership, anyone to whom the child owes money (IRS, divorcing spouses, judgement creditors, and more) may be able to claim the funds in the account.
  3. No backup plan – If the joint owner child is ill or dies before the parent, there is no one else authorized to access the account. And adding more names to the account is not a wise decision for all the other reasons discussed.
  4. Accidental disinheritance – The trusted child may be expected to share the money with other family members according to the parent’s wishes after the parent’s death. If the parent’s wishes are not expressed in a will, then the child may claim the account and not follow those instructions.  Also, if the child dies shortly after the parent, then the account will pass to the child, become part of the child’s personal estate, and then be distributed to the child’s own family.
  5. Ignites family feuds – Other children and family members usually look suspiciously at the child who is joint on an account with the parent. There may be suspicions the child used the money personally, moved money to other accounts, or did not accurately report how much was in the account.  This may lead to fights in court or broken family relationships.

Fortunately, there are alternatives to joint ownership.  Many of the aging parent’s concerns can be solved with carefully designed powers of attorney (POAs).  These allow a trusted child to access the account without the risks that come with joint ownership.  Also, POAs identify alternates to replace the child and may require accountability and restrict what the child can do with the money.  Transfer on death designations can be used to make sure an account is distributed appropriately to other family members.   A revocable trust may also be a useful tool. An estate planning attorney should be consulted about which of these tools are best for the aging parent’s situation.  Most estate planners are reasonably priced and may well save the family from expensive legal fights in the future.

 

Gene Richards_8x10@300Norman E. Richards (Gene) is an attorney at the law firm of Cummings, McClorey, Davis & Acho, P.L.C. where he focuses his practice on estate planning and elder law.  He assists clients with the development of customized estate plans to address their specific needs, including family owned businesses, senior adults concerned about long term care needs, and special needs trusts for children with special needs.  He may be reached at (734) 261-2400 or nrichards@cmda-law.com.

CAREGIVER EXPO – A Must For Caregivers!

Caregivers – Don’t miss out!  Take advantage of the  “Solutions for Family Caregivers Expo” tomorrow (Saturday, October 14) from 9 to 2 at the Suburban Collection Showplace located in Novi, MI.  This is a once-a-year event, and only every other year in Oakland county.

I will be there alongside Jim Schuster, Elder Law Attorney, for the afternoon session called “Elder Law Mini-Course for Caregivers.” Drop by our booth. I’d love to see you and personally give you resource materials that will help you be a more informed and effective caregiver.

At no charge, you have access to many experts in seminars on topics such as: maximizing Medicare benefits, caregiver health, hospice, protecting assets, dealing with dementia, grief recovery, getting quality medical care, and elder law.  You’ll also have access to an exhibit hall stuffed with businesses providing support services to caregivers.  Thousands will attend this event.

Here’s the link for more information about the breakout sessions, times and directions: Caregiver Expo

 

I hope to see you tomorrow!

Virtual Currency Shouldn’t be Overlooked when Putting Together Estate Planning Documents

Gene Richards_8x10@300Virtual currency may not show up in portfolios of many senior adults, but it shouldn’t be overlooked when putting together wills, trusts and powers of attorney. Not surprisingly, a national survey on consumer use of virtual currencies found that among those 65 or older, 75 percent said they were “very unlikely” to purchase Bitcoins. However, some seniors are trendy and tech savvy and might have a virtual currency “wallet.” Here’s a well written blog article on the importance of addressing bitcoin and other virtual currencies in the estate planning process. I’ll add that it is also critical to identify all assets and resources when trying to qualify for Medicaid and VA assistance to pay for long-term care.  Without adequate planning a legal representative, whether agent under power of attorney, personal representative (a/k/a executor) of a will, or trustee of a trust will have difficulty dealing with unique property, such as virtual currency, if the owner is incapacitated or has died.

The elder law and estate planning attorneys at Cummings, McClorey, Davis & Acho, P.L.C. (CMDA) regularly assist clients in planning with unique assets, such as virtual currency.  Even if it is too late to plan, the CMDA attorneys can still help by petitioning for the appointment a conservator in the local probate courts.  Gene Richards may be reached at (734) 261-2400 or nrichards@cmda-law.com. 

Property and Health Care Decision-Making Agents for MS Client

Video 4 ImageWe want to share a series of videos (5 total) that demonstrate how Elder Law attorneys can help those with MS.  The forth video focuses on Property and Health Care Decision-Making Agents.  When an individual is diagnosed with MS, preparing for medical and financial decision-making by other people is a necessity. The video outlines what legal documents must be in place to ensure wishes regarding financial management and healthcare will be honored.

These videos were produced through the collaborative efforts of the National Academy of Elder Law Attorneys (NAELA), the National Multiple Sclerosis Society, and Stetson University College of Law.  The videos will be posted on successive days.  Or you can go directly here to watch them all at once.

The elder law team at CMDA is experienced in helping vulnerable clients of every age.  We are available to assist younger individuals dealing with a disability or debilitating illness such as MS.  We help our clients maintain quality of life and preserving independence for as long as possible. We hope you find value from these videos.  We also welcome your feedback.  Contact Gene at CMDA’s Livonia office by calling (734) 261-2400 or by email at nrichards@cmda-law.com.

« Older Entries Recent Entries »