Inheriting an IRA may seem like a good thing, but there can be tax consequences if you aren't careful.Read more
Joint Account Fails To Do Its Job
- November 8th, 2001
In May 1989, Dr. Andrew A. Freier opened a joint checking account in his name and that of his daughter, Susan Freier Caine, at NationsBank. In 1998, when Dr. Freier''s health began to decline, his wife asked the bank to add her to the account so that she could pay bills. Although she was told by a bank employee that the signatures of all parties to the account would be required to make such a change, Mrs. Freier returned a new signature card to the bank that contained the signatures of only herself and her husband. The bank nevertheless added Mrs. Freier to the account.
From January 2 through February 3, 1998, Mrs. Freier wrote thirty-five checks totaling $100,181.13 on the account, including one check for $75,000, which was deposited to her own account on January 27, 1998, the day Dr. Freier died.
Mrs. Caine sued the bank for $100,181.13 plus interest, claiming that the bank breached its contract with her when it added Mrs. Freier to the joint account without her permission. The trial court ruled in favor of the bank, holding that Virginia law allows a new owner to be added to a joint account without the consent of all parties. Mrs. Caine appealed.
The Virginia Supreme Court also sided with the bank. In reaching its decision, the court focused on the wording of the joint account contract, which states that "[e]ach owner appoints all other owners as his or her agent to endorse, deposit, withdraw and conduct business for the account." The court said that 'conduct business for the account' can include adding a party to the account.
Joint accounts have been viewed as 'the common person's estate plan' because they look like an easy way to distribute assets and avoid probate. But, as this case illustrates, there are serious risks involved. This is why most elder lawyers suggest that clients consider other methods of managing their finances, such as powers of attorney and revocable living trusts.
Local Elder Law Attorneys in Ashburn, VA
Margaret A. O'Reilly, PC
Margaret A. O’Reilly is an estate planning and elder law attorney with over thirty-five years of legal experience. Attorney O’Reilly graduated from Duke University with a degree in psychology, and received her law degree from Northeastern University School of Law in Boston, Massachusetts. For over 15 y...
Hale Ball Carlson Baumgartner Murphy PLC
Loretta Morris Williams is a certified elder law attorney by the National Elder Law Foundation. Ms. Williams was admitted to the Council of Advanced Practitioners, National Academy of Elder Law Attorneys (NAELA) in 2012. She serves as President of the Virginia Academy of Elder Law Attorneys. Ms. Willia...
Needham Mitnick & Pollack, PLC
Judith Mtinick is well known for acting as a guardian, conservator, trustee or agent on behalf of clients or by court appointment. This experience gives her a wide perspective and extensive practical knowledge that she uses when advising clients in drafting their planning documents. Her experience, as a court appointed...