Last month, we learned that Dick’s sister called, informing him that Mom is starting to decline in health. As a result, Dick’s sister is going to be “added” to all of Mom’s bank accounts just in case she needs to pay her bills. Sound familiar? What could go wrong?
Unless Mom is very, very careful or has an overly diligent banker, an awful lot can go wrong. When someone walks into a bank and asks that a person be added to an account, banks generally operate on the assumption that the person is going to be added as a joint owner of the account. By default, a bank will generally select that the account is “Joint With a Right of Survivorship” or “JTWROS”. Even if they do not expressly make that designation, Georgia law holds that the account is presumed to be with a right of survivorship, unless a contrary intention is indicated.
The problem occurs when Mom ultimately passes. By operation of Georgia law, the account belongs 100% to the joint owner at the moment of death and passes regardless of the contents or provisions of Mom’s will. The ownership transfer is only overcome by clear and convincing evidence of a contrary intention.
So, if Dick’s sister is added to the account and over time Mom begins pulling all of her money and property into that account (say for example she sells her home and moves into a care facility), Dick’s sister would effectively receive all of those funds to the detriment of Dick’s Father or the other children.
I have seen this fact pattern play out dozens of times. It is plainly obvious to everyone that the parent never intended to leave all the money to one child. In the majority of cases, the one sibling does the right and honorable thing and returns the money to the estate or distributes it equally. However, there are many instances where the sibling takes the position that the money is his or hers, just as Mom would have wanted.
The unfortunate fact is that the remedies to the situation are so simple. First and foremost, make sure you know your banker and know what they are having you sign. Ask questions and get answers. Second, if you need to add someone onto an account, designate them as having “signature rights only” so that they can conduct banking transactions, but have no ownership interest. Thirdly, if more rights and authority are needed, use a General or Financial Power of Attorney to act on behalf of Mom. Lastly, if Mom is in need and cannot care for herself or for her property, a Petition for Conservatorship or Guardianship can be filed in the Probate Court without a lot of time, trouble and expense.
Next month, we will look at the Probate Court process for dealing with an incapacitated adult and obtaining guardianship and conservatorship. What is required to file? What responsibilities are incurred?