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Monday, January 4, 2016

Joint accounts: banks and lawyers give different answers

The problem of parents adding their adult kids to their accounts raises its head yet again. In this case, a beneficiary was given conflicting advice by the bank and the lawyer about the deceased parent's joint account. Who was right? Below are his note and my response:

"My Mother asked me to go to the bank with her and when I did it was for her to add my name to her joint account and I signed the papers. After her death the bank phoned me to come up there (6 hours away) and have my Mother's name taken off the account as they said the account now was mine, but her lawyer would not let me have it and said if I did he would not represent us then in finishing the estate. Since it was just finishing up I had no choice. Was this right?"

On the face of it, yes, I believe the lawyer was right. As a general rule, assets that belonged to a parent and later had a child's name added as a joint owner belong to the parent's estate. The bank was wrong to tell you that you could keep the account, and I suspect the bank was well aware of this. It is not possible that banks (or at least their legal departments) don't know the laws regarding inheritance of joint property. It's just easier for them to do it that way, and I believe that it won't change until the banks are forced by the courts to get up to date.

Having said all of that, there are a few facts missing from your question that might impact my response. General rules are ALWAYS shaped and amended to fit the facts of an individual case.

First of all, when you and your mother went to the bank to add your name, did the bank officer ask your mother why your name was being added? And if so, what did your mother say? This makes a difference because, as I mentioned, an asset like this where a child's name is added belongs to the parent's estate unless there is evidence provided by the parent that he or she intended for the child to inherit the asset (as opposed to adding the child's name to avoid probate or to get help with the banking). If the question was asked and answered and the banker made note of your mother's answer, that would make a difference.

If your mother told the banker that you are supposed to inherit the account to keep for yourself, then it should have been paid to you. Otherwise, it stays in the estate.

You also didn't say whether there was a will. In the old days, wills never mentioned joint bank accounts because the rule was that joint property was joint property, and therefore was not affected by a will. However, these days people will sometimes use their wills to confirm their intentions regarding inter-generational bank accounts. It's a way of providing the evidence I mentioned above.

Also, you didn't mention whether you are the only beneficiary of her estate. If you are the only beneficiary, you are going to inherit that account anyway. However, if you are not the only one, the account is to be shared among all the beneficiaries.

You should be glad that the lawyer you're working with knows his stuff. He probably just saved the estate from a lawsuit.

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