HELP ! Just realized something that could cause a big problem !

[ferfermom]

I am freaking out right now, and need some advice asap ! My husband & I just filed Ch 7 on September 15th. In the midst of all our financial problems, my husband has also been trying to help his elderly mother try to get into assisted living facility.

We found a place today & were discussing how she was going to pay for her care before Medicaid kicks in. His mother has $12,000 in the bank , which my husband has Power of attorney on & I just found out is listed on her bank account !!!

He has never touched any of her money. She has been living in her own apt, paying her own bills & rent. She just recently suffered a fall, and needs 24 hr care.

So, is it too late for my husband to have his name removed from her bank acct & have his brother take over? If my husband stays on her acct will the trustee find that & seize his mothers money as if it were ours? If we were to supposedly have $12, 000 that would force us into a ch 13 , am I correct?

[scorpion35]

incorrect
the trustee can take the money but not force u into chapter 13

[backtoschool]

The trustee can only take half of the money if there are two owners of the account. The money can be exempted with wildcard and cash exemptions if you have them left over. You will only have to exempt your half of the money. The money is not income and will not put you into a Chapter 13. It is a cash asset that needs to be exempted.

[redhunter]

If I have signature authority or POA for a bank account for a major public corporation and I file bankruptcy, the trustee can't take the cash of the corporation. How are the facts any different for the OP?

My wife was on the account for two of our children that had about $1000 each in a custodial account. The trustee didn't take this cash and we fully disclosed it and mentioned it in the 341. Was I just lucky?

[ferfermom]

SO is it too late for my husband to go to bank on Monday & switch the POA over to his brother?

[backtoschool]

If I have signature authority or POA for a bank account for a major public corporation and I file bankruptcy, the trustee can't take the cash of the corporation. How are the facts any different for the OP?

My wife was on the account for two of our children that had about $1000 each in a custodial account. The trustee didn't take this cash and we fully disclosed it and mentioned it in the 341. Was I just lucky?

Custodial accounts for children are different as long as the money is put in there a year before filing and is either for college (ie a 529 account) or is a a custodial account funded by someone else (ie a grandparent) where it can be proven that the parent is on the account solely there for custodial purposes, usually that money is exempted. Corporate signature rights are also different than joint bank accounts as the signer is usually not the owner of the account.

A joint bank account is a very different situation.

[backtoschool]

Yes it is probably too late if the account is a joint bank account. The trustee will see this as a preferential transfer and may go after the money.

[nerves]

You may be ok on this. Since he is POA only - this does not constitute him as the actual owner of the funds. I think it will come down to how your state defines it within BK law. Had a similar situation and it was not a concern or issue with our attorney or trustee.

[keptdigging]

Does the source of the funds/actual owner of the funds have no bearing? In other words, whose money is it REALLY?

I would think this comes up all the time and there would be law on it.

Hypothetical: Let's say my mom has $100K in a brokerage account. Maybe she travels a lot, is concerned about the instability of the markets, and decides to put me on the account and give me POA.

- If those funds are now 50% mine, I've just received a $50K gift, with possible tax ramifications.
- Or, conversely, are those my mom's funds, with me having a fiduciary responsibility to act in her interest--that is, not drain the account to go around the world with my mistress?

The reasonable answer would be: what is the source of the funds, and what was the intent of the owner of those funds? If the funds all originated from my mom and were managed for her benefit (that is I didn't withdraw anything for my own use)--it would seem obvious that it's her money.

Now anyone want to chime in on what the law actually is?

[keptdigging]

Another hypothetical: A friend gives me $1,000 for "safe keeping." Okay, he's probably a fool, but let's ignore that. I put it in a safe deposit box. I don't spend or comingle--it isn't a loan. What if it's a high end bicycle worth that? What if my friend has the safety deposit box and simply gives me a key?

My point is that there's a threshold somewhere between me having access to property or money and it actually becoming mine.

And I find it hard to believe that the mere fact of putting my name on a bank account constitutes a gift... of exactly half of its contents.

Once again, not a lawyer tho.

Now go back to the OP's case: husband hasn't touched ANY of the funds

[ferfermom]

I really appreciate everyone's responses. I guess we will have to wait until Monday to try and ask our attorney. Although he is somewhat hard to get a hold of on phone.

The $12,000 is all her money, her life savings. I would hate to see her lose it. My husband has never used his authority to gain access to her account. It is just our crazy bad luck that she is needing to move into a care facility the same time we're filing BK. She has no idea , didn't want to burden her with our worries.

[backtoschool]

If your husband is just power of attorney, and it is not a joint banking account, then you may be able to transfer power of attorney to his brother. The key will be if it is a joint account or if it an account in her name that he has power of attorney over. Those are two different things.

[backtoschool]

That money in the safety box is now a cash asset that goes to the bankruptcy estate.

If the safety box is in your name, it is now an asset of the bankruptcy estate and goes to the trustee.

Yes putting your name on an account means you can take money out, so it means that you could have used that money to pay creditors, etc and it is an asset of the bankruptcy estate.

[backtoschool]

Does the source of the funds/actual owner of the funds have no bearing? In other words, whose money is it REALLY?

I would think this comes up all the time and there would be law on it.

Hypothetical: Let's say my mom has $100K in a brokerage account. Maybe she travels a lot, is concerned about the instability of the markets, and decides to put me on the account and give me POA.

- If those funds are now 50% mine, I've just received a $50K gift, with possible tax ramifications.
- Or, conversely, are those my mom's funds, with me having a fiduciary responsibility to act in her interest--that is, not drain the account to go around the world with my mistress?

The reasonable answer would be: what is the source of the funds, and what was the intent of the owner of those funds? If the funds all originated from my mom and were managed for her benefit (that is I didn't withdraw anything for my own use)--it would seem obvious that it's her money.

Now anyone want to chime in on what the law actually is?

A joint account is just, that, joint. It means that you now own 50% of the account. That means that the trustee has access to 50% of the account. Who put what money in when doesnt matter, since you can withdraw all of the money hypothetically if your name is on the account.

[clearslate]

ferfermom,

A similiar situation happened with me. I was named as a joint holder of my dad's account after my mom died. It was really just to help him get finances straight. The money is not mine (account had ~$22k). The day after I filed, the bank froze the funds. My attorney drew up papers and informed the TT that the money was not mine. Apparently, it's very common for adult children to have their names on an elder parent account. It took a week for the TT to release the freeze. That very day, I went to the bank and had my name removed. Well, at this particular institution, my dad and I had to be present together to close the account and he opened one in his name. So definitely talk with your attorney but I say have your husband remove his name. You may want to call the bank and find out the procedure. Your mother in law may need to be present.
Be upfront about this (don't try to hide it from the TT).
~CS