KNOW YOUR RIGHTS #6

Who Will Help Me Pay My Bills if Something Happens to Me?

Using a Joint Bank Account to Manage Your Money

 

Lily Snowe had always paid her bills on time.  Recently, she was too sick to get out of bed. She didn’t get around to sending out the bills for a few months. Then bill collectors started to call. It was hard, but she paid them all. Lily is worried what will happen next time if she gets sick again. Lily has been thinking about putting her son’s name on all of her accounts, so he can take care of her affairs if something happens. She’s not sure if this is a good idea.

Should I add a friend or relative’s name to my bank accounts so they can pay bills if I get sick?

Setting up a joint savings or checking account is an easy way to allow another person to be able to use your money to pay bills. You just call or go to the bank and ask for the forms to add another name to your account. Then you both sign the forms and return them to the bank. It’s easy to do. BUT, there can also be problems. Be sure you know all the facts.

• A joint account will allow a friend or relative to handle the money in that account, but nothing else.

The other person on your account can take money out to pay your bills, but cannot handle any other affairs. Examples:

1. If you have a house or car that needs to be sold, the friend or relative will not be able to do it

2. If the friend or relative has to talk with anyone about your bills, they may not be able to. If they have to call your phone company, your insurance company, or your credit card company for you, the companies probably will not talk with them about your account without your permission. If you are sick, you may not be able to give permission.

If you want someone to be able to handle your affairs in these ways, you need to have a Power of Attorney. To learn more about this, see "Know Your Rights" #5 in this series.

•When you set up a joint account, the bank considers both people on the account co-owners of the money, even if you made all the deposits.

You both have equal rights to the money. Either one of you can withdraw money without asking the other. It doesn’t matter if you made all the deposits.

This means that it is very easy for someone else to take your money. This may be hard to imagine, but it does happen. Sadly, in most cases when money is taken, the person doing it is a family member. If someone does take your money for their own use, you might have to sue to get it back.

This could be very difficult. And even if you win, the money could be long gone. 

If your money is taken from a joint bank account by a person who is supposed to be using the money for you, contact Legal Services for the Elderly as soon as possible. We can help you make sure that it doesn’t happen again. If you want, we can also help you try to get the money back.

• Your money could get caught in the middle of the other person’s legal battles.

If the other person on the account goes through a divorce, their spouse could claim a right to some of the money in the account. Then you would have to take legal action to prove that you deposited all of the money in the account. The money could also be tied up if the other account owner gets sued for any reason or goes through bankruptcy.

• When you die, the money in a joint bank account goes directly to the co-owner.

One of the basic features of a joint bank account is the "right of survivorship." This means that the money left in the account when one of the co-owner dies must go to the other co-owner. So if you have a joint bank account, the other person on the account will get all of the money when you die. This is true even if you have a will leaving the money to someone else.

So, before you set up a joint bank account, think about these issues. These are just some of the results of adding another name to your account. There are other things that you should think about, too. For example, setting up a joint bank account might affect whether you can get MaineCare (the new name for Medicaid). Call Legal Services for the Elderly to find out more.

If you think about all this and decide you still want to add another name to your bank accounts, ask your bank if there are ways to set up the account to lower the risk of someone taking the money. There may be limits the bank can put on the account to protect you.

Even if you already have a joint bank account, it may be a good idea to also get a power of attorney. Read Know Your Rights #5 to learn more about powers of attorney. If you’re not sure which choice is best for you, call Legal Services for the Elderly, and a free lawyer will help you figure it out.

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