Very often, when someone is ill, they will set up a checking or savings account in their name and the name of someone else, so that the other person can pay their utilities and other expenses while they are ill. This works, but it is not the best way to accomplish what is desired.
If the person should not recover their good health, the question arises as to what the decedent intended with respect to the joint account. An estate beneficiary will claim that the account was intended to be a "convenience account" and that the funds in the account belong to the estate of the decedent. The joint owner may claim that the decedent intended that the remaining funds in the account would be a gift to him or her.
Unless the conflicting claims can be resolved, the confrontation, which could have been avoided, may cause unpleasantness in the family, and litigation. The way to avoid this problem is to have the ill person sign a durable power of attorney, in which one of the powers granted is the power to access a checking or savings account and write checks.
If the person who granted the power of attorney should die, there is no question as to the ownership of funds in the checking or savings account. Giving someone a power of attorney does not confer ownership rights in the accounts over which they have power to act, so the funds belong to the estate.
A durable power of attorney is one of the most valuable tools the estate planner works with. A durable power of attorney will avoid the time and expense involved in obtaining a court appointment of a guardian or conservator if someone becomes ill or disabled. A durable power of attorney will avoid the unpleasantness and bitterness, to say nothing of the cost, if it becomes necessary to ask a court to determine who owns a joint account.
If you have not signed a durable power of attorney, contact us and we will be glad to prepare one for you. If you have signed a durable power of attorney, but it is more than three years old, see us about signing a new one now.
