Attorney Thomas B. Burton discusses a reader question about an authorized person on a bank Account and who gets the money after the death of the person who owned the bank account in this latest Real Attorney Reacts series.
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Welcome back, I'm Attorney Thomas Burton. I'm an estate planning and asset protection attorney, here in Wisconsin and today's Real Attorney Reacts Series is another column addressed to The Moneyist, who is a columnist at Market Watch. He's not an attorney but he takes personal finance questions from people and responds and lately, I've noticed a trend with estate planning issues in these questions and so, many I peruse these articles and when I find one that I think is illustrative for estate planning purposes, I like to use it as an example because I think, others can benefit from this information as well.
So let's get right into it. I'll read you the question and then I'll provide you my analysis under Wisconsin law.
"I took care of everything after my father died. My aunt, who claims she's entitled to $27,000, say I only care about his money. Dear Moneyist, my dad passed away recently. He served our country for 22 years. He was very ill and told no one. When he died at the hospital in Savannah, Georgia, his sister just watched him die and left me to take care of everything. I had to go to his apartment, take care of his car and find a funeral home in Georgia to transport his body to Puerto Ricco, where he will be buried. At his apartment, I found a little card, a very simple card with his sister's name and also an account number. This card was just a laminated piece of paper. I called the bank and I was told that his sister was listed as an authorized person on my father's account. Remember when my dad died, she left me to take care of everything. I called her to let her know that there was an account, there was $27,000 in it. She responded to say it was your father's intention to leave me that money. She says she will be returning to Georgia to collect the money. She paid for the funeral in Georgia and she paid for the funeral in Puerto Ricco and now she's asking for documents to send them to veterans’ affairs to claim back the money that was spent on these funerals. the last time I spoke with his sister, she told me that I'm only interested in his money. Do I have a right to that money even though she was an authorized person on his bank account?"
Okay, so there's the gist of the question. The father passed away, it sounds like he had the small bank account, the father's sister is saying he meant to leave it to her and this is the daughter. So I'm going to read you a little bit of The Moneyist response and then I'll provide my analysis in between. He says, "I have a theory about why your aunt says you only care about money. She hopes that she will maintain an influential role over you, a senior member of your family and shame you into proving it wrong by walking away from the money in your father's bank account and who knows everything else. Some psychologists might call that projecting, given her wish that she received the $27,000 in your father's bank account. I am less generous and prefer to call the brass neck. An authorized person, on a bank account, if that is indeed what she is, give someone the power to act on behalf of the owner of that account such as writing checks. They are not a co-owner of the account, do not own anything in the account."
So first, I would agree with him here, the key here is whether she is really just an authorized person meaning someone authorized as a signatory to write checks or whether she is indeed a co-owner on the account because if she was a co-owner on the account, she might have, then she would have a right to the money after he died. So be very careful, when you're putting children or relatives on bank accounts to know what you're doing. Do you want them to just have the authority to write checks for you, I recommend you make them only an authorized person. In fact, I don't usually recommend doing that, I would rather you do that through a trust but if you're going to do it, authorized person means they can write checks for you. If you make them a co-owner, then upon death, they automatically inherit the account because they're the only remaining owner.
So he says, "The first thing I would do is inform the bank your father's died, change any passwords and freeze the account. If your father did not leave a will, you are the sole heir to his estate. Your aunt is out of line and out of fact."
So he's also right there, under Wisconsin law, if this is the only daughter and there was no will, she would be the only heir. It's likely similar in Georgia and I don't know if he looked it up but probably similar there because that's how most states do it, direct to the children if there's no will and no surviving spouse.
So he says, "I have one note of caution. Don't get too hung up on what you did and what your aunt did not do in the aftermath of your father's death. You showed up, completed your work and fulfilled your role. You did what any good daughter could and should do, you saw to it that your father had a dignified funeral. This is a great opportunity for you to feel the ground shifting beneath you and to stand up to your aunt without being unkind or raising your voice or even listening to your aunt tell you to petition the court to become administrator of your father's estate. Stay humble, stay grounded, stay the course."
So that's good advice. These situations often become emotional when there's a death involved and money and so it's good to take a step back and think about it, try to think about it, objectively but on the basics of the facts here, this is how I see it, there was $27,000 in the bank account. If the aunt is an authorized person, she was authorized to pay bills during his life but this authorization dies, it ends at death. Many people don't understand that. Agency power dies when the principal granting the agency power dies. It dies with them. So unless you have something like a trust set up which can outlast your life and the trustee retains power or gains power upon death, an agency power like that is going to die with the person when they die. That's why the bank will often freeze bank accounts as soon as they find out someone has died. Now in Wisconsin, if his only asset was the bank account with $27,000, we have what's called a small estate limit of $50,000 max. If you have $50,000 or less total of probate assets, you can use a small estate affidavit to transfer it to the surviving heirs, without a full-blown probate which normal probate usually costs a few thousand dollars, with court fees, attorney fees etc. So a small estate probate, you can often do with an attorney for more like a thousand dollars or a little more, depending how much time they have to wrangle with the banks but if you have to go to a full probate, plan on spending a couple thousand, three to five percent of the estate usually and so, in this situation, check in Georgia, they probably have a small estate limit, I don't know what the number is but if you're under that number, you could maybe use that to transfer the bank account before you have to go, try to open a full-blown probate in Georgia and it sounds like there's some ties to Puerto Ricco, so I'm not exactly sure where this person lives but it can be a pain to do a probate in another state. That's why anyone with property in multiple states or a property in a state and a territory like Puerto Ricco, I recommend you set up a trust because you can use a trust to own property in all 50 states, if you want. You can avoid probate on every property through a trust and because in theory, if you had property in 50 states, you would have to open 50 probates upon death, in each state where the real estate is located. So she didn't mention real estate. I don't think there's any here but look into that small estate method in Georgia, and if you're watching in Wisconsin, be aware that limit. That's why at my office, when we do probate avoidance planning with trust, I always tell clients we want to keep any non-probate assets below $50,000. Ideally, we have all the assets inside the trust but sometimes, if they have one small asset, they get later or something, if we can keep it below that limit, we won't need to open a full-blown probate and that's the goal of probate avoidance planning because that leads to the long-term savings down the road.
So I'm sorry to hear about the situation with the aunt. I think The Moneyist gave good advice to keep a calm, cool head and carry forward, carrying out her father's estate and don't let and one other note, if the aunt says the father told her or writing or something, the note, the note I think was just about the account, a sister's name account number laminated piece but there was no, he needed to put it in writing in a will to be valid upon death, will or trust. This doesn't sound like a will to me. A laminated piece of card with sister's name on it and it wouldn't qualify as a will under Wisconsin law. I'm not sure about Georgia, some states allow handwritten wills, we don't in Wisconsin but the point is, if it's not in writing in a will, it's likely not valid. So she needs to go to the bank, see whose name is actually on the account as the owner, if the sister, her father's sister was not a joint owner, just authorized person, then if she's the only heir, it likely belongs to her and take those steps I mentioned, to get the count transferred to you.
So I hope this is helpful to you. Others in similar situations may see a similar fact pattern and be able to glean some useful information from this, to deal with your own situation because my goal with this channel is to help people wherever you're at, to provide legal education and information, in order to empower you to take charge of your own estate planning affairs and I do this totally free of charge, pro bono on the YouTube channel, trying to help as many people as I can.
So if this has been helpful to you, please consider giving it a 'Like', 'Subscribing' to the channel because that will help more people find these videos and benefit from the information as well.
Thanks for watching and we'll see you next time.
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