Children's Bank Accounts

[wonderful]

Hello,

We have been considering BK for about 2 years now. We haven't used a CC in well over a year. The only thing that hold be back is that I don't want three CD's that belong to my kids to be seized. They each have about $2,000 in them and since they are minors, they are also in my name.

Additionally, they each have their own savings accounts. One with $1,000, one with 300, one with 200.

Will the trustee want these? I could not bear them loosing THEIR money because of my stupidity. This is all really their money. My parents gave them money when they were born and it went into a CD.

What should I do to protect them?

j

[mtngirl47]

About 3 months before we filed BK our daughter turned 18 and she took my name off of her accounts...and it never came up in the BK. You could see if one of your parents could become the joint name on all of the kid's accounts and get your name off. I've read threads here in the forum about folks who were joint with their parents and took their names off of those accounts before BK. Get started right away! Good luck!

[wonderful]

That is kind of what I thought. Put all the kids money into another account and have my parents be on their with them. It's just that they live in another state and the whole process is going to be a real pain. I can't open an account for the kids and put my parents on there without them being present, can i?

[discombob1]

A lot can be done via fax these days. Or if you choose a bank that has branches in both places, that may work. I know the Patriot Act requires people show ID's now. I had to do that to open a savings account at a bank I've done business with for years.

ETA: call the bank, they'll tell you exactly what you need to do.

[IamOld]

I have a similar situation - my son works, but he's not yet 18 so I'm on his account as custodian - BUT - and here is the BUT - the entire balance can be exempted under my state's rules...so should I worry? It is HIS money very clearly traceable to his job...

[BKAttyMI]

This is always a huge problem. Legally, if you are a "joint" account holder, no matter who puts the money into the account, you legally own it. I've had creditors pull money out of parents' bank accounts before. Generally, if you are in any sort of money trouble whatsoever, get your name off their freaking accounts ASAP! There's nothing worse than telling a client to do this only to have them call me up sobbing a few weeks later telling me their elderly parents' bank account has been drained because they didn't take my advice. You can not just take your name off of a bank account, this would be transferring an asset solely into someone else's name. However, if the money/funds are traceable to the other joint account holder, have them take their money and open up an account elsewhere in just their name. Also be wary of banking at any institutions you owe money to when filing, these accounts can be frozen. If you MUST be on someone else's account, "authorized user" NOT "joint owner" is the way to go.

[justbroke]

Will the trustee want these? I could not bear them loosing THEIR money because of my stupidity. This is all really their money. My parents gave them money when they were born and it went into a CD.

I would be very careful about transferring assets (money) to someone else (another adult), just to protect it from the bankruptcy court. You should seek legal advice from a competent attorney practicing in your District. When you move money around like that, it's called a fraudulent conveyance, and Trustee look specifically at this. The lookback period is at least a year and can go to two years.

I can only highly recommend that you seek legal advice on this topic. The best way to give children money, is to set up a trust where you can't loot it. If your name is on a bank account, it can be looted at any time! The Trustee is really looking to see if you used the account to "hide" money from creditors. This is why I highly recommend talking to a bankruptcy attorney who is also an asset protection attorney.

Hopefully you have the original time deposit certificates, they are traceable, there was no co-mingling, and it was significantly in the past.

justbroke's reading suggestion: For Florida, there was a case where the parent's tried to hide money in the child's account. While there were other complications with mistakes on the petition and the attorney dying shortly after filing, they were denied a discharge for hiding money in a child's trust fund. While this involves a trust fund, I wanted to show what would happen if you attempt to hide things from the court. Andrea Beauman (Trustee) v. James Post, Case No. 8:03-bk-18550-KRM, Adversary No. 04-156 (Middle District of Florida, 2006.

[IamOld]

Bkatty the problem is my son CANNOT have an account by himself - he's not yet 18 - but if it comes to judgement, we'll have to do it...for bankruptcy it doesn't matter because his balance and mine is WAY under what my state allows you to keep.

THANK YOU!!!!

[johnnycakes]

Look into UTTMA or UGMA accounts where you act as a custodian - NOT as a joint account holder.

Even with those, you have to be able to document and justify any monies deposited or withdrawn. We had separate accounts for our 3 children that the trustee had no issue with because they never had any withdrawals, and deposits were modest for the most part. Even one large deposit that was an indemnity policy payout meant to cover future costs for our medically involved son wasn't an issue. We showed where the money came from, and that it went directly into his account.

Our experience may not be the norm, but if you handle the accounts as theirs - not yours, you will have a much better shot at avoiding trouble.

[keepsmiling]

My ds is 17 and a half. I was surprised to learn that with some banks (he has Valley National) he was able to open a checking account in HIS OWN NAME. So, I took my name off as custodian. Hoping that won't cause a problem as it was all legit and he needed a way to access his own money without my intervention.

[justbroke]

If you are only custodian, then it is not your account and would not be a problem.

Even if you are custodian, as in the Florida case I posted above, you could get in some trouble if you try to funnel money into the account for the express purpose of hindering, delaying, defrauding or hiding money from creditors of the Trustee.

[IamOld]

Thank you everyone - in my case I'm not worried about the Trustee - my son's acct is---$500 if that? Mine is LESS!!! There is no problem in exempting it.

It would be a problem if I get a judgment and have to pull his $$ out of his account that he earns...I guess he'd have to go cash till he can open an account.

Here is hoping and praying bkprcy is filed soon...