My wifes name is on father in law's bank account

[UpsideDownMI]

My wife and I just remembered that she is listed as a co-owner on her fathers bank account. We forgot about it since it has been over 10 years since he added her and we have never accessed the account or seen any statements. This presents a big problem for us on this should be handled as we believe that he has a large sum of money in his account.

We have decided to tell her dad about our intention to bk, even though we had wished to keep this matter private from family. We are going to ask him to remove her name from the account so that the trustee does not take any of his money. We also want to make sure that my wife's name is not any other accounts that we are unaware of. Are we doing the right thing here? Are their any other options, concerns, or scenerios that we should consider? Our my concern is to protect his assets from our case. Your responses are appreciated.

[EricaCallaha]

I am a cosigner on my mom's accounts, just so we have access to her money in case something happens. We are in our 13 and we listed the account with our papers and the trustee's office asked us about it and we told them why I was on the account. They didn't have any problem and didn't even ask for a copy of those statements. They just asked if audited would I show any personal activity in the account in the last 12 months. I said no (because I don't use the account) and they let it go. We are confirmed and have made 2 payments and no problems.

I can see how this would make you nervous...especially if there is a large sum of money in the account. My mom had about $20K in hers. But if you have a really aggressive trustee, it might be best to take her off for the time being. Hopefully your fil will keep this news under his hat to avoid any embarassment to you and your wife.

Good luck.

[StartingOver08]

Yes, remove her name from his accounts.

[EricaCallaha]

Just remember too, that if asked...be honest about it. You were concerned for her father's money and she is just a signer. No money of yours is in there. It is just in case something happens and somebody needs access to Father's money.

Luck and all that good stuff...

[UpsideDownMI]

Thanks for the advice. The sooner we get her name off the account, the better I will feel.

[BornAgain]

Thanks for the advice. The sooner we get her name off the account, the better I will feel.

NO! Don't do it!

(I hope I'm not too late.)

[BornAgain]

That is why you came here, right? To find out how to best plan your BK so you don't accidentally do something against the 'rules' and hurt your potential discharge.

.

[UpsideDownMI]

Is it really against the "rules" to remove her name from the account? As far as I am aware, the rules are that you can not transfer, hide, or fail to disclose assets. I don't think that removing my wifes name from her dads bank account fall under that criteria. As far as I am aware her dad can remove from his account without her consent. To me that proves that it is in fact his account and not hers. To be safe, I am going to consult with an attorney before we do anything.

[BornAgain]

Verbatim from NOLO's 15th ed. How to file Chapter 7 Bankruptcy. (Admittedly the authors and legal team at NOLO aren't "Gurus" with big post counts on this board so I don't know how much weight their advice carries but they are, well... published bankruptcy attorneys.)

From chapter 3, pg 49, Your Property and Bankruptcy:

It's common for older parents to put their son or daughter’s mane on the parent’s bank account. This allows the child to write checks and otherwise manage the account if the parent becomes unable to do so; it also means the account goes straight to the child when the parent dies, outside of probate or other inheritance procedures.

If you are name on someone else’s account and file for bankruptcy, however, that account could be considered property of your bankruptcy estate, subject to being taken by the trustee for the benefit of your unsecured creditors. Of course, it’s not really your money while your parent is living, but if the trustee things you are free to withdraw the money and use it for you own purposes (as lowdown as that would be), the trustee may consider at least some of it to be part of your bankruptcy estate.

In these situations it’s important to tell the trustee, up front, that it really isn’t your money to use as you wish. That would be a breach of your fiduciary duty towards the account holder, and possible elder abuse. To make sure that the trustee understands why you are named on the account, you should declare the account on your property schedule (Schedule B) but explain that it really isn’t yours. You also can explain that it would be a breach of your duty of trust (fiduciary duty) toward the main account holder for you tu use the money for any purpose other than his or her welfare. You should identify the account and explain why you are named on it in Question 14 on the Statement of Financial Affairs. Finally, you would be well advised to gather documents showing that the sources of the money in the account clearly belonged to the main account owner. (See Ch.6 for more on these paperwork requirements.)

To avoid all this trouble, you may be tempted to remove your name from the account before you file bankruptcy. Don’t do it. [emphasis mine] Removing your name makes I look like you are trying to hide the whole issue form the bankruptcy court (which you are). The trustee might well convince the court to dismiss you bankruptcy altogether, on the ground that you committed fraud on the court. You’re better off leaving your name on the account and explaining the situation to the trustee. If the is significant money in the account, consider consulting with a lawyer about the best way to handle the situation in your paperwork. Incidentally, if you are thinking that the trustee won’t find out about the account if you don’t declare it, don’t go there. They have their ways.

Best of luck to you. Thanks for the typing practice (any typos are mine, not the text's). And when it comes to acting on "legal advice" you find on the Internet -- buyer beware!

[StartingOver08]

Thank you for the help BornAgain!

Yes, I am not an attorney so listen to the NOLO book! Now we know - maybe this should be a sticky!

[OhioFiler]

If we follow those rules we learned in kindergarden such as "Honesty is the best policy" we rarely have problems. It's the whole concept of trying to hide the fact one is on the account that creates the red flag. Telling the trustee the truth will most certainly work to the petitioner's advantage.

[UpsideDownMI]

Born Again - thanks for your long response. I was going to say that I could not find that info pg. 49, but I realized that I am working to the 14th edition. I do have another question on this subject.

What if when we tell her dad about our situation and the issue with the account he decides that he is going to remove her name? Something like "thats MY money, not yours! I am taking your name off of our account!" If that were to happen, there is nothing we can do to stop him from doing so. I don't think that would constitute fraud as it was beyond our control and she was not the one to actually remove her name from the account.

Also, we are actually no longer sure on whether she is a co-owner or just an authorized signer. I hope she is just a signer, as that would not demonstrate ownership. I guess we will find out shortly.

[LuciluS]

My husband is on his mother's checking account in Indiana. We live in Arkansas. His name was put on her account, at my insistence last July, because she does not have a Will.

She went to her Bank and asked to remove his name as she knows we are filing for Bankruptcy in the near future. Indiana Law requires she close her checking account and open up a new account. She has her paycheck, social security check direct deposit and has some of her utilities auto withdrawn from her account.

She doesn't want to go through the hassle of getting all of it 're done'. However, in our situation, although she is 71 and still works full time, she really doesn't have that much money in her account.

I'm glad to know that we were Unable to take his name off of her Account. We will get the name of the Bank, Account # and inform our Attorney.

Now will her Bank receive a Notice of our Bankruptcy???

Thanks,

Luci

[EricaCallaha]

My mom's bank did not receive word of the bankruptcy. Also, if she is not an owner of the account, the owner can choose to remove her name as signatory at any time...with or without her permission. The trustee cannot do anything about that.

Good luck.