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Home » How Assets are Titled is Extre…

How Assets are Titled is Extremely Important!

Posted By
Catherine R. Mack
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Should You Add a Family Member to Your Bank Account to Pay Bills or Avoid Probate?

Recently, I learned a very important lesson: it’s very important to know how our estate planning clients have their assets titled. My lesson? Advise my clients early and often that if the client decides to change the “ownership” of an asset (whether by adding another person to a checking account so that the person can pay bills or by filling out paperwork so that the asset is “transferrable on death” or “payable on death”), the client should first check with me, the estate planning attorney. And each time I meet with a client, particularly an elderly client, I should ask to see the client’s latest financial reports.

I am learning that financial advisors may speak with their clients more frequently than I. In that context, the financial advisor may tell the client: “Hey, you can avoid probate if we re-title the account by making it ‘payable on death’ to your loving niece.” Does the client call me first, of course not! But then, when the client fills out the paperwork, thinking she is doing a “good thing” because she is avoiding probate, the account that the client and I thought would be available to pay the costs of administering her estate and paying all her debts is not available because it now belongs to the niece.

Similarly, some clients are convinced that adding a trusted person to the bank account (so that the person can sign checks and pay the bills) is also a good idea. Maybe someone at the bank suggests it? Maybe the client has attended one of the numerous “free luncheons” sponsored by well-meaning financial advisors. In the past, it was easy to add someone as a “signatory” on a bank account, but that addition was considered for convenience only. Thus, when the owner of the account died, that additional signature person’s powers ended. But now the presumption, under the law in D.C. and Maryland at least, is that if you add someone as a signatory on your account and you do not make it absolutely clear that you are adding the person’s name for convenience only, then the bank considers the person a co-owner of that account. And when you, the actual owner dies: Bingo! the other person with what you thought was only signature authority now owns the account and all the assets in that account.

If you need assistance with deciding how to title assets or to make sure your bills can be paid in the event of your illness or death, I welcome you to contact me for a consultation. We can come up with a rational plan that meets your goals and avoid unintended consequences!

Categories: Assets / Financial Planning

Categories

Articles in the Media
Assets / Financial Planning
Elder Law
Estate Taxes
Health Care Directives
IRAs / Retirement
Life Insurance
Long Term Care
News
Personal Representatives
Power of Attorney
Probate
Trusts
Wills

About Cathy Mack

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Catherine R. Mack
I am an estate planning and estate litigation attorney who has been practicing law for many years. Based in Bethesda, Maryland, I work with clients in Montgomery County and throughout Maryland, the District of Columbia, and Virginia. My practice focus is 1) estate planning (wills, trusts and ancillary documents), 2) probate (the publication and effectuation of a Will through the local court) and 3… Read More

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Recent Articles

What not to do when leaving a home to an heir - The Washington Post , Feb. 22, 2020
By Ilyce Glink and Samuel J. Tamkin Feb. 19, 2020 at 6:00 a.m. EST Q: I just read your column giving suggestions to an elderly mother who wanted to make sure her daughter received her home at death without probate. I’m a retired attorney, and I don’t know how many times I was asked the same question by clients over the years. There’s one thing that you didn’… Read More

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Law Office of Catherine R. Mack
Bethesda Crossing
7315 Wisconsin Avenue
Suite 800 West
Bethesda, Maryland 20814
Phone: (301) 961-8590
Fax: (301) 961-6599
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Our offices are located in the former Air Rights Center, now called Bethesda Crossing

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My law office in Bethesda is physically closed right now and so I am not taking new clients at this time. For my existing clients, I am working remotely from Virginia. If you need to reach me or my assistant Lisa, please use my email at cmack@cathymacklaw.com or Lisa’s email at admin@cathymacklaw.com. Or leave a phone message at 301.961.8590. Stay safe and secluded in these difficult times.