Question About Bankruptcy and $$ in the Bank

[MIGrandma]

My Mom cashed in my Dad's life insurance policy when he passed away and put it into a savings account at the bank in my name only. We did add DH's name on so in case something happened to me, he could sign and she could still get to her money. Then we thought what about if something happened to both of us (car accident, etc.) so we added our DS's name as well.

But. On Christmas Day DS asked me to take his name off and put our DD's name on, as he (DS) is planning to file for bankruptcy (which I don't agree with, but it's not up to me) and doesn't want his name tied to any large bank account.

My question is, could his creditors take that money from the bank if his name is on it? Even though it is not his money. We only put his name on just in case we were to die, then Mom could still get her money.

Even when we do take his name off can they still come back and take it anyway? I would hate for my Mom to lose her money just because we (and she did agree to it) added our DS's name to it.

 

[BellePrincessBelle]

Yes they can depending on the amount. Not only that it'll set off red flags that he removed himself right before filing bankruptcy.

 

[MIGrandma]

Yes they can depending on the amount. Not only that it'll set off red flags that he removed himself right before filing bankruptcy.

Even though we can PROVE that the $$ is my Mom's and NOT his? He never put a penny into the account. The ONLY deposit that has ever been made, was the insurance check in my Mom's name.

 

[Oreo Cookie]

Is his name on the account as a joint account? If it is a joint account, then he technically has access to the funds, and therefore they could be considered an asset. A joint account transfers ownership. Anyone on the account has the access to take out money at any time.

You should change the account, and have your son ask his attorney. He will probably have to explain the account, and you and your husband may have to verify the information and provide some type of proof as to how the account is being used for your mother.

If he is just an authorized signer in case of emergency there should be no problem.

 

[Uncle Remus]

Even though we can PROVE that the $$ is my Mom's and NOT his? He never put a penny into the account. The ONLY deposit that has ever been made, was the insurance check in my Mom's name.

It became his when his name went on the account.

 

[Uncle Remus]

My Mom cashed in my Dad's life insurance policy when he passed away and put it into a savings account at the bank in my name only. We did add DH's name on so in case something happened to me, he could sign and she could still get to her money. Then we thought what about if something happened to both of us (car accident, etc.) so we added our DS's name as well.

But. On Christmas Day he asked me to take his name off and put our DD's name on, as he is planning to file for bankruptcy (which I don't agree with, but it's not up to me) and doesn't want his name tied to any large bank account.

My question is, could his creditors take that money from the bank if his name is on it? Even though it is not his money. We only put his name on just in case we were to die, then Mom could still get her money.

Even when we do take his name off can they still come back and take it anyway? I would hate for my Mom to lose her money just because we (and she did agree to it) added our DS's name to it.

Ya know, this problem of your mother bein' able to get her money could be resolved by puttin' her name on the account.

 

[Oreo Cookie]

It became his when his name went on the account.

This is true. A joint account transfers ownership and anyone on the account has access to the money.

 

[cornflake]

Legally, that's not your mother's money at all; it's apparently yours, your husband's and your son's.

She gave it to you, for reasons I don't understand, and you put your husband's and son's names on the account. As above, that makes the money theirs unless, also as above, it was only in some type of very limited capacity.

 

[Uncle Remus]

This is true. A joint account transfers ownership and anyone on the account has access to the money.

Hey!! Merry Christmas! I trust you had a warm one.

 

[Oreo Cookie]

Hey!! Merry Christmas! I trust you had a warm one.

Merry Christmas right back at ya! I did have a warm one, very different from what I was used to. We were on the beach Christmas eve day! Now that's a white christmas! lol

 

[Uptown Girl]

I think you are going to run into all kinds of other problems with this account once he opens the bankruptcy case, namely, gift tax issues. Your mom "gave" you that large sum of money and I am guessing no one paid gift tax on that transfer, unless the amount is under $13,000 (the initial gift was to you). A good lawyer might be able to get around your son's issues with having his name on the account but he might not too.

 

[ilovemk76]

My Mom cashed in my Dad's life insurance policy when he passed away and put it into a savings account at the bank in my name only. We did add DH's name on so in case something happened to me, he could sign and she could still get to her money. Then we thought what about if something happened to both of us (car accident, etc.) so we added our DS's name as well.

But. On Christmas Day he asked me to take his name off and put our DD's name on, as he is planning to file for bankruptcy (which I don't agree with, but it's not up to me) and doesn't want his name tied to any large bank account.

My question is, could his creditors take that money from the bank if his name is on it? Even though it is not his money. We only put his name on just in case we were to die, then Mom could still get her money.

Even when we do take his name off can they still come back and take it anyway? I would hate for my Mom to lose her money just because we (and she did agree to it) added our DS's name to it.

Even though we can PROVE that the $$ is my Mom's and NOT his? He never put a penny into the account. The ONLY deposit that has ever been made, was the insurance check in my Mom's name.

Why is Mom's money not in an account with her name on it?

 

[cornflake]

I think you are going to run into all kinds of other problems with this account once he opens the bankruptcy case, namely, gift tax issues. Your mom "gave" you that large sum of money and I am guessing no one paid gift tax on that transfer, unless the amount is under $13,000 (the initial gift was to you). A good lawyer might be able to get around your son's issues with having his name on the account but he might not too.

I wondered about that one. I originally didn't get they were planning that her mother could take it back - I think because I don't get the point, heh. But assuming it goes back, and it's over the amt., the gift tax goes both ways.

 

[tnmt]

Maybe, the mom is trying to hide her money from say medicaid or if she has to go to nursing home, etc. that way they can't get to it and she still has her money. Just sounds fishy to me. I hope that is not the case. She could have just put it in her own name with beneficiaries or something to that effect unless she is hiding it from someone.

 

[tinatark]

There is a look back period for bankruptcy - they look at property transfers/sales/large purchases on credit cards - i think 90 days, but it may be 6 months. Check with an attorney to confirm.

 

[Nayan]

My huge red flag is why is your DH filing bankruptcy and you say it's not up to you??

 

[tnmt]

I think she said her SON is filing BK not her DH

 

[brerrabbit]

Gosh knows I am not a Tax Attorney or a Bankruptcy Attorney but I think the gift tax may not be an issue currently. The $13,000 a year gift limit is to prevent the amount given from being subject to the lifetime limit. In other words if you give under $13,000 a year you do not have to report it to the IRS. If you give over the $13,000 then the amount needs to reported but it can just count against your lifetime amount. Estate taxes have to be paid if you are left over $600k or $1.2 mm for a couple. Anything ove $13k a year would have to be counted against the $600k estate limit. If mom will not leave over that when she dies then there should be no tax issue.

As far as the name on the account I would definitely talk to the attorney on that. Creditors more than likely can and will come after that money should the son file for bankruptcy. In cases like this if the amount of the money is significant then it should be put into a trust with benificiaries. By so doing it protects the money from these situations as well as escaping the problem of taxation of the estate. At this point I believe the creation of a trust with the Mother as benificiary but controlled by the daughter could achieve what you are looking for without subjecting the funds to the son's creditors.

 

[jcano]

Sounds like a plan to hide the fact that Mom has any assets, so she can get the govt. (ie tax-payers) to pay for any care she might need in her old age.

 

[MickeySP]

My huge red flag is why is your DH filing bankruptcy and you say it's not up to you??

Geez jump much!! It was her DS not her DH

I would close the account, open a new one. Is it not in DM's name for any specific reason? i.e. health or dementia issues? If this is the case it should be a custodial act or trust so noone's finances other than DM is affected.

You need to find a look back period/also get the papers from when DS was put on. This may help prove he was only put on as a "just in case"

I have the same account set up, but my DS is listed only as to be POD(paid on death) so it does not count in his finances.