I have three adult siblings who live in different states, and we are disputing the circumstances surrounding joint accounts shared with our 85-year-old mother, who has early-stage Alzheimer’s. Our mother has a net worth of approximately $2 million, spread across several bank and brokerage accounts. Late in life, she added a different brother as a co-owner of each of her accounts to help her manage her money.
My brother “Joe” is listed as the sole co-owner of the majority of our mother’s brokerage accounts, totaling $1.3 million, while my brother “Andy” is the sole co-owner of a $600,000 bank account and I am the only co-owner. $100,000 brokerage account holder. I think our mother just forgot to add my sister “Sue” as a co-owner anyway. It was always her intention that the four of us should equally inherit her estate.
I suggested to my three brothers that all the accounts should be made into sole ownership in our mother’s name with four equal beneficiaries. I thought this could avoid many possible complications with gift taxes and distribution at the time of our mother’s death, since as it stood now, each co-owner would have to divide the money from their co-ownership account and send it to the other siblings.
Sue is appointed as Power of Attorney and may manage our mother’s individual accounts as needed. However, Joe is adamant that the current account co-ownership setup is the best way to help our mother, especially to protect her from financial fraud should she need to move into a nursing home. He insists that there will be no gift tax with the eventual distribution and that this setup is simple and easy to co-manage.
This situation is causing a lot of stress and mistrust between my siblings, which I hate. I suggested we change things to make our mother’s financial situation as easy as possible, especially at the time of her death, and not because I don’t trust Joe. At the moment no one touches our mother’s accounts and I pay most of her expenses since she lives with me.
Please advise.
Frustrated brother
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“Sue, as the power of attorney, should be able to withdraw money from your mother’s other accounts and/or open a bank account with those funds in your mother’s name,” The Moneyist writes.
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Dear Frustrated,
Your brothers have every reason to act as if white truffle butter doesn’t melt in your mouth.
Overall, they have stitched up your mother’s larger bank accounts, and you are most likely dependent on the kindness of these siblings to add you to the accounts as co-owners or distribute the funds among all four siblings after your mother’s death.
I wouldn’t hold my breath if Joe or Andy did any of these things. They can resist just as easily with kindness and smiles as with anger and resentment. I’m sorry to say that the most harmful actions, for you and your sister, have already been taken.
We may never know the conversations that took place when your brothers were added as co-owners. But there is a very important difference between a “co-owner” and a “co-signer” of an account. The latter can withdraw money but does not own the money in the account.
If your mother was not of sound mind or her mental capacity was diminished when your siblings were added to these accounts, or if she intended to add them as cosigners, there may be a case where you can contest your siblings’ ownership of these accounts.
The legal framework surrounding these cases varies by state, but it is usually up to the estate of the original account owner to prove that elder abuse and/or undue influence occurred. As always, you should consult an attorney who specializes in elder law.
Limitations on proxy duties
Sue, as power of attorney, should be able to withdraw money from your mother’s other accounts and/or open a bank account with those funds in your mother’s name. You should keep these funds for additional medical expenses and long-term care as your condition worsens.
But the bottom line is that without the cooperation of your two brothers after your mother’s death, with no lawsuit to reverse the situation, you will be left with sole ownership of the $100,000 brokerage account and the four of you will inherit everything else. on the estate.
It is virtually impossible to say without more information, but it is unlikely that Sue, as a power of attorney, will have the ability to change ownership of these accounts unless this is specified in the terms of her POA agreement. This would also depend on the laws of your state.
“The power of attorney allows the agent to access parents’ bank accounts, make deposits, and write checks,” Jupiter, Florida-based Welch Law says in this overview of the POA. “However, this does not create any ownership interest in the bank accounts. Allows access and signature authority.”
The law firm continues: “If the person’s parent wants to add them to the account, they become a co-owner of the account. When this happens, the person has the same authority as the parent, accessing the account and making deposits and withdrawals.
But those who have power of attorney cannot take care of themselves when it comes to their parents’ finances. “As a POA, they are a fiduciary, which means they have a legally enforceable responsibility to place their parents’ benefits before their own,” adds Welch Law.
You shouldn’t have to pay for your mother’s care out of your bank account. Your sister, as the prosecutor, should take care of this. She talks to your siblings about your mother’s Alzheimer’s and how the four of you plan to handle her care in the months and years ahead.
Will your brothers keep their promise and heal you and your sister? Only time will tell.
You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com and follow Quentin Fottrell on X, the platform formerly known as Twitter.
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