Bank On ItPosted: September 13, 2011
Regarding large financial institutions, Paul Volcker once said (roughly), “Those banks are not too big to fail–they are too big to exist.” I’d be interested to get your reactions on that one, especially Wise, Jetter, and Beighley (local bankers). If you want a visual of their evolution (the banks, not the 3 bankers), click here.
If you or someone you know wants to make another person a joint owner with rights of survivorship on a bank account, tread cautiously. You have a few issues to consider:
1) Is the primary account holder competent to add a secondary account holder?
2) Is the account going to become to a joint account with rights of survivorship, where Secondary instantly becomes an owner of the account, or is the account joint for convenience purposes only (e.g. paying bills), where the Secondary does not ultimately get the money?
3) Is the bank document “complete and accurate” (term from my “active CPA” days)? I’m calling that CAA from here on in.
Let’s play out a scenario. Seat belt, please.
Primary wants you to have the account when he dies because you’re so cool and helpful. You drive Primary to his physician, where you get a “100% Mentally Competent” note, and then you drive Primary to the bank, where the bank promptly screws up the document. Can you say “Lawsuit Comin'”?
Primary account holder dies. A probate court appoints a Personal Representative (PR), either one named in a Last Will And Testament (LWAT) (a testate probate) or one who applies with the court if no LWAT exists (an intestate probate). The PR has a duty to marshall all estate assets and discovers the account. Mud wrestling ensues because a dispute exists regarding account status, as the doc was not CAA. It’s Go Time. Lawsuit alleges coercion of and incompetence of Primary and incomplete bank doc–and you’ve been named as the Defendant.
So now, instead of getting money, you have to pay an attorney to defend you. Good job …
What’s a judge to do now? Depends on which judge you draw.
In Eggleston v. Kovacich (274 neb. 579, 742 N.W.2d 471), the Nebraska Supreme Court ruled that if a bank doc doesn’t comply with the Nebraska Probate Code’s requirements, a party may introduce extrinsic evidence of the Primary’s intent. (Yeah, I just hyperlinked to Nebraska Revised Statutes Chapter 30. Admittedly, kinda dorky. I can hear my friend DK yelling “Kinda??” right now.)
So now you’re on the witness stand explaining that Primary wanted you to have the dough. PR says, “Of course you’d say that! You want the dang money, and the dead guy’s dead! Nice story, you crook!” PR’s also going to bring his handy-dandy Forensic Geriatric Psychiatrist to testify that Primary was screwed up in the head eight ways to Sunday.
And you were just trying to help Primary, right? Now lawyers and an expert witness are burning through his estate. Nice going …
Back to the “What’s a judge to do now” piece. This thing’s a coin flip in my correct opinion.
His or Her Honor may give weight to the expert and believe the “fair” result is to put the cash in the estate, because (I forgot this part) you’re a beneficiary anyhoo–and you’ll get something. Or His or Her Honor may believe the extrinsic evidence (you) and the 100% doctor note. Hard to say what the deuce would happen.
In conclusion, I’m loquaciously pointing out that life’s complexities sometimes require experienced individuals’ assistance to obtain your desired result. It’s better to ask before rather than after. I can change my oil, but when my 18 y.o. car hits 240k, I’m going to the local dealership to change the timing belt (for the fourth time).
And yes, I am trying to get into a Toyota commercial …
Over and out.