The Problems Associated with Joint Bank Accounts
By Shannon Laymon-Pecoraro, Esq.
Most often, joint accounts are held with a right of survivorship. In Virginia, the institutions must provide the account owner with the option to designate the account as joint without a right of survivorship. In my five-year career, I have yet to see any joint account held without a right of survivorship, despite the fact that I am most often told that the additional account holder was added merely for convenience purposes, such as assisting with bill payments during life and accessibility to immediate funds to cover funeral expenses upon death. The problem, however, is that a laypersons understanding of this designation is muddied by the advice of non-lawyers.
A joint account held with a right of survivorship will pass to the other account holder(s) upon the death of another. This means that the account will not pass in accordance with a Will or Trust that was created by the deceased account holder. The account holder will have no legal obligation to carry out your testamentary wishes, and the estate or the estate beneficiaries will be left to prove the account was not really intended to provide the other account holder with an ownership interest, but for convenience purposes.
This problem most often arises when one child is named as a joint account holder to help a parent pay their bills in their later years. Although this child often has a power of attorney, rather than just add the child as an authorized user by putting the power of attorney to record at the financial institution the child is actually added to the account. Clients have explained to me that when they tried to record the power of attorney that the employee of the financial institution informed them to just add the individual to the account because it was easier. The problem is that the same employee never explained the designation between “with” or “without” survivorship, or that there was an option. As a result, those clients didn’t realize that one child could inherit the funds of the account to the detriment of the other children. While some children may feel they have a moral obligation to allocate funds as expressed in a Will or Trust, others will not.
This is also an important issue in blended marriages. Spouses commonly own joint assets. In blended families, there is always a concern that the surviving spouse will create an estate plan to the detriment of the other spouse’s intended beneficiaries. If the surviving spouse inherits 100% of a joint account, the surviving spouse’s estate plan controls. If the first spouse to die wanted to leave something to their child, whether at their death or at the death of the second to die, they would be unable to have any ability to do so from a jointly-held asset.
Because of the issues associated, we often recommend that people avoid creating joint accounts unless they truly intend for that one individual to inherit the entire account upon their death. While this may be contrary to the advice of non-lawyers, clients often understand why this recommendation is made after a detailed discussion.
Ask Kit Kat – Frozen Alligators
Hook Law Center: Kit Kat, what happened to the alligators who got trapped in water that usually doesn’t freeze in Snowmageddon, the big snowstorm on January 4th and 5th?
Kit Kat: Well, that is an interesting question. Actually, the alligators fared quite well. Take, for example, the alligators that live in Shallotte River Swamp Park in southeastern North Carolina. This is about the furthest point north that alligators can live. According to George Howard, the park’s general manager, he started to notice what he thought were cypress knees—woody projections from tree roots—poking through the waters of the swamp. On closer examination, he realized they were tips of alligators’ heads sticking out of the water, so they could continue to breathe. He comments, ‘They have been around for millions of years. They are one of the only species in existence that is virtually unchanged. And they continue to be good at just surviving. This is just another example of how tough they are.’ He’s got a recording, so he can show others what happened. They may look dead, but they’re not. He even pulled one out of the water to prove his point.
The phenomenon of brumation refers to the slowing of metabolic functions in reptiles. It’s the cold-blooded animal’s closest approximation to hibernation, though it is not really hibernation at all. Their bodily functions just slow down to the point that they’re not even digesting food. However, once the weather warms, they’re right back to normal. He plans to film that, too. When the weather is cold, but not icy, alligators spend their time at the bottom of the swamp or burrowing in the mud. The ice forced them to come to the surface to continue to get air.
Other examples of brumating animals are iguanas and turtles. While the north and mid-south endured Snowmageddon, Florida experienced temperatures in the 40s. That was low enough to cause iguanas to fall from their preferred tree habitat and land on patios and pool decks. However, they weren’t dead. Once the weather warmed, they were back in action scurrying around like they normally do. So, too, with turtles, who went into a low metabolic state to survive the cold snap.
Nature does have a marvelous way of helping all of its creatures adapt to the change of seasons! It so interesting to watch and be part of this grand universe! (Cleve R. Wootson Jr., “These alligators spent days trapped in swamp ice—and survived,” The Washington Post, (Animalia section), January 9, 2018)
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