By Deb Miller, JD

WV Senior Legal Aid

John didn’t realize it, but when he added his son’s name to his stock account, he made Tommy a joint owner. John didn’t work well with computers and needed help with keeping all of his records straight because of vision problems. He added his son for convenience’s sake.

John decided not to make his son his financial power of attorney. He wanted to handle his own money matters.

His will included a provision that his stocks would be donated to his favorite nonprofit organization.

After John passed away, his stocks did not go to the nonprofit, but instead Tommy got them. Why didn’t John’s will work?

The names on the stock account determined ownership before and after John’s death. The will had no legal impact in that situation. John didn’t understand that. Plus as co-owner Tommy could have sold any of the stocks at any time.

Some types of accounts have a way to list a co-owner or an after-death beneficiary, such as bank accounts, life insurance, stocks, savings bonds and retirement accounts, which controls no matter what the person’s will says. That makes the account beneficiary form, account signature card or co-owner form very important documents. It’s basically the equivalent of a will for those specific accounts.

Another risk of adding a child’s name to a parent’s account is that it becomes subject to the child’s creditors.

For example, Mary added her daughter Anna’s name to her checking account for convenience’s sake. Not too long after, Anna was at fault in a catastrophic car accident. Anna’s assets, including Mary’s checking account, can be used to pay the damages from the accident if the insurance coverage isn’t enough.

That wasn’t Mary’s intention. She needs that money for her own living expenses, but the car accident could change all that.

If Anna got a divorce or had to declare bankruptcy, that would likely mean that Mary’s checking account could be part of the asset division. That wasn’t Mary’s intention either.

How can Mary avoid these complications?

Rather than adding a co-owner to an account, switching to an auto-pay plan for utility, credit card, insurance and other bills can work well. Once it’s set up, the customer receives information about the billing amount to be deducted from the account before the payment date.

Another simple option is to have Anna added to Mary’s checking account but only as an authorized signer. With that kind of account, Anna could sign checks or endorse them for deposit without becoming a co-owner. Also, Anna would not be liable for any overdrafts since she would not be an owner.

If circumstances change, Mary can revoke Anna’s authorized signer status.

Another option is to have a separate account that Anna could use for ongoing expenses. Mary could arrange for monthly transfers into that second account for the amounts needed. Anna would not have access to Mary’s main account.

Changing the ownership of an account can also mean one child may receive more from the estate than others will.

As we need more help with our daily tasks, being aware of these types of financial remedies can avoid unexpected problems.

For free legal assistance with a non-criminal matter, West Virginia residents age 60 or older may contact West Virginia Senior Legal Aid at 800-229-5068 or info@seniorlegalaid.org.