Is It A Good Idea To Have My Son Or Daughter On My Bank Account?

I often meet with clients who want their adult children to be able to access their accounts to help out with writing checks or paying bills on their behalf. However, this good intention can create a very serious risk of liability if carried out incorrectly.

Often, a parent goes to the bank and asks the teller to add the child onto the account. In doing so, the adult child is now a co-owner of this account. This action may create problems for the parent. For example, if the child has creditors, later files for divorce, has a failed business or files for bankruptcy, then the jointly owned asset may be vulnerable to claims. This could force the parent to lose some or all of that account to pay the child’s debt.

Instead of adding the child as a co-owner on bank accounts, your child could use a properly drafted Durable Power of Attorney (DPOA) to help you deal with your finances should the circumstance arise. A Durable Power of Attorney is a legal document in which you designate who you want to make legal and financial decisions for you if you cannot make them for yourself. I recommend an extremely comprehensive DPOA that allows your agent to handle virtually all legal and financial matters for you. I also usually recommend a DPOA that goes into effect the moment it is signed (rather than one that "springs" into effect upon the principal's incapacity--called a "springing power"). This means your agent can use it even if you are not disabled. This is often necessary for the DPOA to be accepted at many financial institutions. Therefore, it is very important that you pick only people whom you trust to be your agent on your Durable Power of Attorney. Every Durable Power of Attorney should have a primary agent and an alternate agent who would act only if the primary agent is unable to act for you.

Designating the adult child as a Power of Attorney allows the child to access the account, write checks, pay bills and do everything the parent needs without connecting them personally to the account or exposing assets to the child’s creditors, predators, or divorcing spouses. 

What Documents Are Needed After Someone Dies?

After someone dies, the surviving family members will need to gather up all of the decedent's important papers. This will give the family members and/or probate attorney who will be assisting with settling the decedent's final affairs all of the pertinent information needed to complete the settlement process. Here's the list of documents that will be needed to settle an estate or trust. Copies of the documents will work just fine unless otherwise noted.

Asset information
Copies or originals of the following documents will be needed:
Account Statements - including bank, brokerage, and retirement accounts for at least the three months prior to death
Life Insurance Policies - note that some insurance companies will require the return of the original insurance policy
Beneficiary Designations - for life insurance, retirement accounts, and payable on death accounts
Deeds for Real Estate - there's a common misconception that the original deed is needed, but a copy will work just fine
Automobile and Boat Titles - the originals will be needed to transfer legal title
Stock and Bond Certificates - for stocks or bonds held in certificate form, the original certificate will be needed to transfer legal title

Business Documents
If the decedent owned a business, then copies or originals of the following documents will be needed:
Corporate, LLC or Partnership Documents - this includes copies of the corporate charter or articles of organization and minutes; a copy of the shareholder's agreement, operating agreement, or partnership agreement; and original stock or LLC certificates to transfer legal title
Account Statements - including bank, brokerage, and retirement accounts for at least the three months prior to death
Automobile and Boat Titles - the originals will be needed if legal title will be transferred
Contracts - including leases, loans, and employment agreements
Business Licenses - including local and state licenses
Income Tax Returns - past three years

Contracts
Copies or originals of the following contracts will be needed:
Prenuptial Agreements - including any amendments
Postnuptial Agreements - including any amendments
Loans - including personal loans, lines of credit, and mortgages, along with the original promissory notes
Leases - including real estate and automobile leases

Bills
Copies of the following bills will be needed:
• Utility Bills
• Cell Phone Bills
• Credit Card Bills
• Mortgages and Personal Loans - including lines of credit
• Real Estate Tax Bills
• Storage Unit Bills
• Medical Bills
• Funeral Bill

Estate Planning Documents
If the decedent had an estate plan, then copies or originals of the following documents will be needed:
Last Will and Testament and Any Codicils - the originals will be required because if the originals can't be found, then it's presumed the decedent destroyed them
Revocable Living Trust and Any Amendments - strangely a copy of the trust or amendment is all that's usually needed

Tax Returns
Copies of the last three years of the following tax returns will be needed:
• Federal Income Tax Returns
• State Income Tax Returns
• Gift Tax Returns

Death Certificates
Multiple, original death certificates will be needed to settle the decedent's affairs. I tell my clients to order at least ten.

Who Gets Copies of the Will After a Person Dies?

Wishing you an Independence Day filled with pride in our country, and the companionship of family and friends!

Many movies and television shows have a scene where a family gathers around a big table after a relative has died to listen to the reading of the will. While this is a great dramatic scene, it doesn't usually happen like that in the real world. There is no requirement that a will be read out loud to anyone. So what does happen with the will?

Once the will is located, it should be given to the estate's attorney. Instead of reading the will out loud, the estate's attorney sends copies of the will to anyone who may have an interest in it.  Obviously the person who is named as executor or personal representative is entitled to a copy of the will. He or she is in charge of applying for probate, managing the decedent's property, and making sure the instructions in the will get carried out. (For more information on an executor's duties, click here.)

The estate attorney will also send a copy of the will to anyone who is named as a beneficiary. If any minor children or incapacitated individuals are named as beneficiaries, then their guardians should receive a copy of the will. In addition, if there is the possibility of a legal challenge to the will, the attorney may want to send a copy to any legal heirs, close family relatives, or previous beneficiaries who aren't included in the will, so that they have notice. This will limit the time frame for them to file a will contest. (For more information on will contests, click here.)

Another person who may be entitled to a copy of the will is the estate's accountant, and if the estate is taxable, then the IRS may get a copy of the will as well. If the will funds a revocable trust, then the successor trustee of the trust is entitled to a copy of the will. Note that once a will is probated, it is available to the public and anyone can read it. For more information on estate administration, click here.

What Is A Death Probate (And Why Would I Want To Avoid It!)?

A Death Probate is a legal proceeding ultimately controlled by the county probate court.  Probate procedures vary among the States.  Some are more complex than others.  Michigan allows for informal, as well as formal proceedings.  Despite these differences, the probate process consists of many steps and procedures that remain a mystery to most people.

For the most part, a Death Probate and the administration of an estate are comprised of six basic tasks: (1) admitting the decedent's will to probate court and determining its validity; (2) notifying the decedent's heirs and beneficiaries; (3) taking an inventory and appraising the decedent's assets; (4) paying any last known creditors; (5) ensuring that any necessary taxes have been paid; and (6) distributing the assets to the beneficiaries or heirs.

The probate process often can be expensive and time-consuming.  Studies indicate that the average cost of probate is anywhere between 6% and 12% of the value of the gross estate.  The gross estate is the full appraised value of the estate without any reduction for debts or expenses.  Some of the costs associated with probate are court filing fees, attorney fees, appraiser fees, inventory fees, bond premiums, and, perhaps the largest expense, asset preservation costs (real property taxes, insurance and maintenance) related to maintaining real estate and other assets while the court process is pending. 

The entire probate process can last from several months to several years.  The average length of a probate proceeding is between one and two years, although even the probate for a small, relatively uncomplicated estate sometimes lasts several years.  The probate process is also a matter of public record.  Anyone can access a decedent's probate file and discover very personal estate planning and financial information about the deceased person and his or her family.  If you don't believe me, just visit your local county probate court and request to view the file of a recently deceased family member or friend...it's that easy!  Often, unscrupulous individuals access these records and prey upon unsuspecting family members and heirs of the decedent.

If that's not enough, if the decedent owned real estate (another home, a parcel of vacant land, a timeshare interest, etc.) in another State, the family may be required to initiate an "ancillary" probate court proceeding in each one of those States, thereby compounding the time, costs and hassle of settling the estate.     

Proper estate planning can eliminate the Death Probate process.  It is all about preserving your hard-earned assets, saving tax dollars, professional fees and court costs, and keeping you in control of your own affairs.  While it certainly is "peace of mind" for you, ultimately, it is a blessing for your loved ones.