Attorney Thomas B. Burton analyzes the following question by a reader who owns a joint bank account after her mother's died and she is wondering "Do I Tell My Sisters" about this joint account, when she is the sole owner of the joint bank account following her Mother's death. Attorney Thomas B. Burton analyzes this question about joint bank accounts after death and provides tips and analysis for viewers to use and understand when formulating their own estate plans.
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Welcome back to Real Attorney Reacts.
I'm Attorney Thomas Burton. I'm an estate planning and asset protection attorney here in Wisconsin and in this series, I take real reader questions and analyze them under Wisconsin law for the benefit of all our viewers.
So today's question was just submitted this week to The Moneyist columnist and again, it has to do with money in an inheritance. We're going to get right into it. I'll read you excerpts of the question and then provide my commentary and analysis of how this would play out under Wisconsin law as we go along.
The headline is, "I took care of my late mother for eight years. Am I obliged to tell my sister, she made me co-owner of a substantial bank account?"
Okay, so once again, bank accounts, joint bank accounts are rearing their head, in this question. You're going to see the issues as we go through it.
This daughter writes, "My mom passed away. Three daughters shared power of attorney and are shared executors of her trust." I think she means shared trustees of her trust because you can only have an executor of a will but it sounds like they had a trust and the three daughters were shared trustees.
"As the youngest daughter, I worked full time and was the primary caregiver for my mom for eight years. I managed her activities of living, food, bathroom visits, medicine, medical appointment and performed her dialysis etc. I managed her finances including taxes, investment and even reclaimed thousands of dollars for my mom due to a bad business deal she was involved in the past. In 2013, it upset my sisters when I was initially given power of attorney but I decided to share the responsibility and even enlisted an attorney to formally draft a trust."
So that's where the trust came in that they were co-they were all co-trustees with their sisters it sounds like.
"We were all present during this conversation. Years later, my sisters would only come down two times a year, sometimes less, to visit mom and did not do much at all to contribute to her care. My mom received a pension and social security benefits. She also had the means to afford a full-time caregiver during the days when I was at work for at least two years. I oversaw all of her care during the evenings, even when we went on vacation with her. Long-term care would have cost substantially more and would have exhausted my mom's finances. My mom also wished to remain and receive care at home."
So according to this question, it sounds like she's honoring her mother's wishes to stay at home and she's right, I mean I don't know how much it was costing but my guess is it was less at home. The average classic private nursing home care in Wisconsin, statewide is around $8,000 plus per month, per room. So it's likely they were saving money, you know, especially with the daughter providing the care and just having the caregivers come in during the day.
"In order to appease my sisters and because they felt it was not fair that I inherited a house from my father, their stepfather who also passed in 2013. I decided to disinherit a portion of my mom's investments annuities."
So I'm not sure what she means there but apparently she did that along the way.
"My mom was upset about this and asked me to be a joint owner on her savings account in 2013, after we met with her attorney. Since then I cared for her in our house and even responsibly managed her finances which gained significant interest over the years. Now that my mom has passed, we are going to discuss her estate which is significant and most of the beneficiaries of the account are my sisters, on the account are my sisters except for the joint savings account which has a large sum of liquid cash in it. My conscience is getting the better of me and I would like to be transparent about being the joint owner of this savings account. However, I do not feel they are entitled to any of the money in it as they hardly participate in the care and financial support of our mom. We all had power of attorney but they did not do much to help which is now irrelevant anyway. However my sisters are also listed as paid on death beneficiaries. I am willing to divide her state fairly and distribute the amount to be received by each sister equitably."
So here's her question, to The Moneyist, who again is an advice columnist, personal finance columnist not an attorney but a money advice columnist.
"Am I obligated to inform them of this joint savings account? I have already informed the bank, social security, her credit card companies and her retirement pension that she has passed. As a joint owner I have access to her account by survivorship", which is true. "How should I discuss the equitable distribution with my sisters? They will be coming down in a week and I have to attend the funeral. I plan to have this conversation with them the next day after the funeral before they leave. We are cordial and I am close with one sister but when finances and heightened emotions are involved, it can get hairy" - signs saddened by the loss of mom and suffering from inheritance guilt.
So there's a lot in this question that I thought would be useful to unpack today and again you could see the joint bank accounts causing some, most were split but then this one was left just to this daughter as the joint owner instead of passing through the trust she's the joint owner. So technically, the bank becomes her, the account becomes her account upon her mom's death. It sounds like her other two sisters are named as payable on death beneficiaries, so if this youngest daughter passed then they would receive the cut. That's the way it sounds to me but it's a little confusing.
So I'll give you The Moneyist short advice and then I'll provide my full analysis.
"Dear saddened and guilt, this money was your mother's gift to you. It was her way of saying thank you. It sounds like you would feel better if you were transparent about all of your mother's finances. The joint bank account and its contents are technically your finances now of course. So you're under no obligation to tell them about it."
He's correct on that. If it was Wisconsin law, it's a joint bank account, it's hers after death if she's the only remaining joint owner.
"However, should they discover this account and ask questions about it, it could look to them as if you are hiding something even when you have nothing to hide. This account does not have to go through probate at all. So that is not a given" and he's right about that, joint bank account would pass by title upon death and it wouldn't have to go through probate. So it's not necessarily a public probate court process where they would find out about it. However, like he said if they do find out about it, it could appear like hiding something.
"When you're faced with a difficult situation, I've always found the easiest way through it is to tell the truth as bluntly as you need to without rank or fear. Your sisters may shrug their shoulders and say fair enough or they might cry foul. If they had a problem with your father leaving his home, you his home was probably fair to say that at least one of your siblings will raise an eyebrow at the amount of money in this account. You are under no obligation to tell them."
So I think he stated the legal obligation correctly but clearly pros and cons without knowing the people involved telling them versus not telling them.
"If they do feel sore tough say it aloud with me, they had plenty of time to help out with your mother over the last eight years. I'm sure they had reasons why they couldn't be there. Paid on death beneficiaries only inherit money from a joint account when the last owner dies. So even if you pre-decease your sisters, you are under no obligation to do anything else but spend every last dime, in the account if you so choose. After all, it's your money, spend as you like."
So that's where it's getting at, it sounds like the two sisters are payable on death after this youngest. So if she left the money in that account, then they would get it after she's gone but it's technically her money. She could close the account, move it into a different account that type of thing,. If it makes you feel better to, I'm not saying she has to do that, I'm just saying it's possible once it's her money.
"If it makes you feel better to tell them, that's fine but do not allow them to guilt you into defying this money among them. Tell them mother made me the joint owner on her bank account. I'm very grateful that she did. Ask yourself, do you feel guilty about having this account, you should not or do you feel fearful about your sister's reaction, should they learn about from you or someone else. It would help to know the root of your anxiety to help you absolve you of any such fears."
He's right about that. She should examine what she's thinking about here.
"If you decide not to tell them, that's fine, just ask your lawyer first."
So I think that's good advice. The lawyer involved here, if she doesn't have one, she should get one, explain this situation in detail and then get some good advice on this because that might help her decide whether she should tell this information or whether it's going to lead to more problems.
"There is no right or wrong, ethical answer to this question."
So The Moneyist is sort of answering, trying to answer her ethical question.
"You must do what feels right for you but make sure you do it for the right reasons. Don't act out of fear or guilt and do not act out of fear or guilt, do what your confident, comfortable-self would do. Say nothing and whistle all your way to the bank or say something and silently whistle your way through your sister's possible protestation. You have the full support of The Moneyist, either way."
So I think he gave her, a lot of these people are just seeking like a second opinion and someone who sees these often and if you've seen my other videos in this series, they get a lot of questions especially lately about money and inherited money and specifically bank account. So for this one what I want to point out again is the dangers of having a joint bank account with someone and using that as the method to pass it upon death. It does work and it avoids probate however my question here is if they went through the trouble to set up the trust, why did the mother do this one bank account this way because what I see happen is sometimes people try to set up bank accounts to this person, that person and then one account suddenly gets a lot more money in it and was that the intent to be that much money. Now maybe it was, it sounds like she said she was removed from her mother's annuities something they did during life, maybe changed the beneficiaries and then the mother felt bad about it and wanted her on the bank account. So the key here is when I'm meeting with clients, it's the mother's money and she has a right to decide what to do with it and it doesn't mean she has to leave it equally to all the children. Now what I'm thinking for the daughter though because look at the situation she's in now, facing these, this sort of guilt and feelings about this bank account. I think I would have preferred to put in the trust the bank account and all the money and then in the trust document said, "Upon my death, I leave the sum of X amount of dollars or X percentage of the estate, let's say, 30% or 20%, whatever it is to my daughter Jane Smith, let's say her name, as a gift for taking care of me these past eight years in her home blah blah blah and lay it out like that. So that's why daughter one is getting this extra gift off the top, okay? So we could leave her a $100,000/$200,000, 20%/30% then the trust could continue on to say I, after that I divide the rest equally amongst my three daughters and name them equally.
Now in my opinion the other daughters may raise a question but the trust would still keep it private, out of probate, only the other two daughters would know about it but the language would be in the mother's writing, right there in the trust instead of this you know oral conversation the mother had with the one daughter about wanting her to have the bank account because I believe that conversation probably happened but it's hard on this daughter who's left behind, she feels like she may have to explain this to her sisters.
So I think I would prefer to have done this through the trust. Now I'm not blaming the other attorney because I don't even know if he knew about it and it sounds like they did it after they left his office but if you're gonna take the time and expense to put together a trust, I would suggest doing your special gifting through the trust because then it's laid out in your language, it's signed by the mother on the date she signed her trust and I think, it would lead to less questions amongst the daughters. Now they could still question it, I mean anyone can question anything but inside the legal document, it would lay out why she's making this gift to the daughter for caring for her, for all these years and in my opinion, it seems reasonable that the other daughters would understand that and it would leave the youngest daughter, the one who's feeling a little bit wondering about this bank account, maybe it would relive her anxiety, you see after death and put less on her to try to explain to the sisters and that's the goal of estate planning is to leave a legacy, gain your own peace of mind during life and leave a legacy to those who leave behind. So it's not any more difficult than necessary for them.
So I thought once again, this would be a good illustrative question for our series on real attorney reacts, analyzing these questions under Wisconsin law. As you can see, these bank accounts come up often, so if you're looking at your own estate planning, I would think carefully about how you want to plan for them and I would suggest maybe following some of the tips I gave in this video.
So thanks for watching. If this video has been helpful to you, please consider giving it a 'Like', so others can find and benefit from this information as well.
Thanks for tuning in and we'll see you next time.
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