Minneapolis Estate Planning and Probate Lawyer Blog

I recently met with a client who informed me that her daughter had financial power over her matters.  ”You mean she has a power of attorney?” I inquired.

She responded that “No.  She has signing authority on my accounts.”

After several more questions I discovered that her daughter was a joint account holder on her mother’s checking and savings accounts.  My client explained that she added her daughter to the accounts to ensure that someone could handle her financial matters in the event of incapacitation.  She further explained that her desire was the daughter could use these accounts while Mom was alive and then at death the assets would go into her estate and be evenly divided among her 4 children.

Unfortunately, that is not how joint bank accounts work.

Joint bank accounts have become a common way for those caught in the sandwich generation to ensure their ability to handle the financial matters of a loved one.   They are also  the method of choice for many unmarried couples to attempt to mirror the financial rights of their married counterparts.  For instance, when one half of a married couple dies, the surviving spouse will be granted the right to any money remaining in a bank account held only in the name of the deceased spouse.  The same happens upon the death of a joint bank account holder.

While joint bank accounts are an answer to problems associated with lack of access to another’s bank account, they may not be the best answer.

Problems with Joint Bank Accounts

The following is a list of problems associated with adding someone to your account.

That person now has all of the same rights to that money as you.  They can write checks, withdraw money and use it for any purpose without your permission or ability to get it back.

Upon your death the money in that account will go directly to the joint account holder.  You may not change this by using a will as joint title holder with always trump your will.  Remember that a will is only used for those assets that are titled only in your name or where the court needs to assist in determining the rightful owner.

Creditors may come after the bank account for any debt owed by anyone on the account. So, if you open an account with your daughter or partner, and she defaults on a loan, the creditor may come after this account regardless of whether you had anything to do with that loan.

The Solutions

A Power of Attorney. Simply adding someone to your bank account may seem the simplest action to take – right now – but it can lead to the above-listed problems.  A simple way for my client to grant someone access to her financial matters is to execute a valid Power of Attorney. Mom may then be assured that someone has the ability to handle her bank accounts, bills and government benefits but without the drawbacks listed.  As noted in my earlier series on Powers of Attorney, the POA ends at death.  So, upon Mom’s death the money in those two bank accounts will be included in her estate and may be evenly spit among her children.

A Trust. I explained that a trust will take care of the majority of these issues with only a bit more hassle.  Mom may set it up so that she is the trustee of her trust until incapacity or death at which time her daughter takes over as trustee.  This allows for a seemless transition whereby the daughter has the ability to handle Mom’s financial needs and manage any assets within the trust.  If Mom recovers, she will again become the trustee over her own trust.  If not, the sucessor trustee takes over after death.

Recognizing the aging nature of medical care, several hospitals have created emergency rooms specifically designated for older adults.  The so-called “senior emergency rooms” include such things as handrails on the walls, nonskid floors, thicker mattresses, softer lighting and larger clocks.

But I don’t want my readers thinking that hospital administrators have turned all soft, warm and fuzzy.  No, they admittedly recognize that hospital that fail to attract the growing population of aging adults will lose out on a large piece of the increasingly competitive medical pie.  The hospitals admit that they have to attract the aging population or . . . die.

These changes aren’t just “cosmetic” but also relate to the actual diagnosis of patients.  One hospital provides cognitive screening upon check in to help identify conditions that might have been missed in a traditional E.R. Of course, it isn’t really clear why hospitals haven’t always done everything possible to identify conditions upon a patient’s entrance into the E.R.

And why are these new measures used only to attract the aging population?  Does this mean that I have to resign myself to blinding light, slippery floors and flimsy mattresses until I get my AARP card?
 

This post concludes the series on choosing a guardian for your child by discussing when you should discuss your decisions with those closest to you.  Presumably, you are very familiar with the person you’ve identified to be your child’s guardian.  That makes you uniquely qualified to pick the proper time and format for talking to them about your decision.

The person you choose will want to follow your wishes as much as possible so please take the time to communicate them now.

One way to discuss these issues with your family, friends and chosen advisors is to break them down into small discussions.  Instead of making time for a 3 hour conversation about the decisions you’ve made perhaps you could start with a talk about why your chosen guardian is important to you and what led you to chose that person for such a crucial role.  Then you can have a follow-up conversation to talk about your hopes and wishes for your child which led you to choosing a guardian.

Chances are you will both (all) be uncomfortable and you have no control over other people’s reaction to what you’re going to say.  So why not handle the details over which you do have control?  You are asking others to listen to the most important decisions you may have to make in your life, so treat them well and lighten the mood a bit. Pick a favorite place (restaurant, park or beach) and have some food and wine (beer) while discussing these difficult topics.

While these subjects are crucial and you want to be able to convey every hope and dream you have for your child in one big meeting, keep in mind that it the subject matter is heavy and uncomfortable. And remember, if the person with whom you’re speaking looks off and says, “look, a school bus,” it may be a good time to schedule another meeting to pick up where this one left off.

 photo credit: mars-hill

Related articles

• Choosing a Guardian, Part 1: How to Choose A Guardian for Your Child (uniqueestatelaw.com)
• Choosing a Guardian, Part 2: How to Keep Your Children Out of the Wrong Hands (uniqueestatelaw.com)
• Choosing a Guardian For Your Child, Part 3: Talk to Your Chosen Guardians (uniqueestatelaw.com)
• Choosing a Guardian for Your Child, Part 4: Explaining Your Decisions to Others (uniqueestatelaw.com)

This post continues my series on choosing a guardian for your child(ren).  You know how to choose someone to (or not to) raise your child and discussed your decision with the person(s) whom you chose.  But you want to be sure to do everything possible to avoid future conflict if anything should happen to you.  In that case, I would also suggest explaining your decisions to any important family and/or friends.

Talking Points

• Why you made your choices. This allows you to do everything you can to cut down on future conflicts.  If something happens and you have left your child to your best friend, family members may wonder why and put up a fight.  But, if you explain to your family why you made your choices (location, age, values) then they will not be surprised when it happens and may even understand why you made these choices.
• Plans for future visits. This goes with the point above in that you can explain that you have made it clear to the guardian that you want them to continue with regular visits with your child.
• What you discussed with your agents. Clarify the list of discussion topics from the above list so that your family also know and understand your wishes for your child’s future.

Other Considerations

Discuss your decisions with your child(ren). If you have children that are older, you may want to explain to them who you have chosen to help them through life if anything happens to you.  In most cases you will have picked someone they know well and they will understand that choice.  Again, it will cut down on any confusion later.  If something happens to you, your children will already know where they are going and why.

Letters of explanation. Write a letter to each person whom you believe will be impacted by your choices.  This list may include your financial and medical agents, guardian(s), family members, child and/or friends.  These can be given out by your attorney at the time specified by you and will allow people to understand your choices at a time when it is crucial that they “get it.”

Providing an explanation of your decisions provides your family and friends with the knowledge that you took the time to come up with a well-though-out plan to provide for the future of your kids.  Who knows?  That may be enough to avoid future conflict, especially for estate plans for blended or gay families.

 photo credit: mikecogh

After the death of the Owner, the following documents must be filed with the county recording office in which the Transfer on Death Deed was originally recorded:

1. An Affidavit of Identity and Survivorship, which identifies that the Grantee Beneficiary or Beneficiaries survived the deaths of all Owners by at least 120 hours.
2. Certified Copies of Death Certificates for each Owner.
3. A Medical Assistance Clearance Certificate issued by the county agency in which the real property is located for each Owner.

You own property in your name alone and want to be sure that it goes to the beneficiary of your choice without the expense and delay of probate.  So, you decide to use a Transfer on Death Deed (“TODD”) to achieve this purpose.

But what happens if you change your mind after you have executed and filed the deed with the county?  Can you cancel or change the TODD?

Yes. The Deed does not do anything to your rights over the property during your lifetime.  It only takes affect upon your death.  Therefore, nothing is set in stone until after death.  You may, at any time, change the beneficiary or cancel the deed altogether.
 

If you are a property owner and wish to use a transfer on death deed (“TODD”) to transfer that property without the hassle of probate, you must

1. Choose a beneficiary or beneficiaries
2. Execute a valid deed that expressly states that it is effective only upon your death
3. Record the deed in the county in which the property is located prior to your death.

A few things to note.  If the property is jointly owned then all owners must sign the deed.  And as #3 above states, it is not enough to execute the deed - you must also record it with the proper county.

We all know the feeling.  You are hired at a new job and show up for your first day all scrubbed up and ready to work.  Then you spend your first day – at least – filling out endless forms.  You are suddenly faced with forms for insurance, retirement, pension, parking permits, sexual harassment policies, dress codes and codes of conduct.

Perhaps you diligently fill out each form in final by the end of that first day and properly turn it into HR.  Perhaps not.  If you fall within the latter category – as many of us do – please be sure that you DO NOT overlook any form that requires a so-called beneficiary designation.  If an employee is married, then her spouse will automatically be listed as the beneficiary on any life insurance or retirement accounts.  But, if the employee is not married or wishes to have a beneficiary other than her spouse, she must be sure to include that persons name as the beneficiary on all such forms.

Any assets with a beneficiary designation will pass to the beneficiary without the hassle, or expense, of going through the probate process.  The intended beneficiary may avoid going to court and proving that the employee intended to leave the account to her.

Caution – your beneficiary designations trump your will.  So if your current partner is listed as the beneficiary  in your will but your life insurance designation still lists someone else (like your ex), guess who gets the insurance money?  That’s right – your ex. A good rule of thumb is to check your designations every year during your open enrollment period.

In a previous post I wrote about how difficult it is for parents to choose guardians for their children; but most parents, even if they are unsure about who they want to serve as guardians, are positive in the knowledge of who they don’t want caring for their children. You hope that creating a nomination of guardians will ensure that your child ends up in loving and capable hands if anything should happen to you, but every once in a while a situation arises where someone unsuitable—or even dangerous—will petition for guardianship.  Luckily, there are steps you can take to prevent you children from falling into the wrong hands.

If you’ve already executed (or are planning to execute) a Nomination of Guardians then you’ve taken the first step. But beyond that, you can execute something called an Exclusion of Guardians (also known as an Anti-Nomination of Guardians). In this document you name the person or people who should under no circumstances receive guardianship of your children. In the document you may want to state the reasons why your child should be kept out of the care of this person, but it is not always necessary.

Oftentimes the excluded guardian is a member of the extended family, and parents fear that executing so strong a document might be hurtful or break the peace. If this is the case then you can request that the Exclusion of Guardians be kept confidential. This means that unless and until the excluded guardian tries to gain guardianship over your children it can be stored privately, and there is no need for anyone except you and your attorney to be aware of its existence.

An Exclusion of Guardians may seem like a drastic measure, but there are many valid reasons to execute an Exclusion of Guardians; a history of abuse, financial irresponsibility, mental illness, alcoholism, or other more personal reasons. How are judges to know if a seemingly stable relative is unfit to serve as guardian unless you tell them? This is exactly what an Exclusion of Guardians does.

If you feel strongly about this issue please call my office for more information. You hope the document will never need to be used—never be seen by any eyes other than your own—but when it comes to your children you are always better safe than sorry.