Some of the gifts were easier to classify than others. The court found, for example, that a 1993 Buick had been given by the father only to Gina, and not for the use of both husband and wife. Four different gifts of $10,000 each from the father, made to qualify for the annual gift tax exemption, had clearly been made to one or the other of the parties, making it easy for the court to put each such gift in Gina’s or Edward’s column. When considering that Gina’s father had paid off a credit card debt of $12,500, the court treated the payoff as a gift to both parties because Gina and Edward had both purchased items with the credit card, so that payment of the debt benefited both of them.

As to one gift from Gina’s father, you could say that one critical word (or contraction) made the court regard the gift as having been made to both parties. Gina’s father had given $15,000 towards bricking the jointly owned house and garage. This obviously enhanced the value of the marital home and benefited both Gina and Edward. More than that, there was evidence that when Gina’s father made that particular gift, he had said it was for “ya’ll.” Some outside the South think that “ya’ll” is used below the Mason-Dixon line to refer to one person or more than one. In this instance, though, as in most cases, “ya’ll” was a plural pronoun referring to both Gina and Edward, thus supporting a ruling that the gift had been to them both.

My point in this week’s column is that when dealing with real property or gifts through an estate, it should be done in writing with the help of a professional.  In this case, had an attorney to document the gift in writing, then the father’s intent would have been clear.

When drafting legal documents, you should hire an attorney.  The assistance they provide you will make the matter much easier and clarify the details properly.  In today’s world of chat gbt and AI, there are way too many options to choose from.  If you want certainty that your document properly transfers the property in accordance with your wishes, then an attorney familiar with your jurisdictions laws, customs and requirements is invaluable.

The post “Y’all” Means Marital Property appeared first on Moak & Moak, P.C. -Attorneys At Law.

A testator is a person who leaves a Will in force at his or her death.  A Will is a legal instrument which states how the testator’s property is to be distributed at death.  A valid Will avoids many of the problems that may arise from dying without a Will and allows a person to leave property to the persons he or she desires.  You do not have to leave property to your children or grandchildren, especially if they have been disrespectful.  If your heirs have not treated you correctly or respectfully, then you can sell your property and spend your money on you.  If there is anything left, then you can name a charity or someone who has been respectful and appreciative as the recipient of your estate.  However, you MUST have a Will drafted to correctly state your intent and include provisions in the event the disrespectful folks are not successful in challenging your Will.

In addition to naming the recipients of the testator’s property, the Will also designates the individual(s) who will manage the property, make distributions in accordance with your wishes  and possibly care for minor children or grandchildren.

For a Will to accomplish any or all of these results, it must have been properly signed.  Texas recognizes three kinds of Wills: oral, handwritten and typewritten.

To sign or execute any of these Wills, the testator must meet the following basic requirements:

            1) Be at least 18 years of age, married, or serving in the armed forces;

            2) Be of sound mind at the time of execution;

            3) Not be unduly or fraudulently induced (forced or deceived) to make the Will; and

            4) Have testamentary intent.

Additional requirements exist depending on whether the Will is oral, handwritten or typewritten.  There are “cookie cutter” Will forms available, however, often they originated from another state, are outdated, or fail to meet additional requirements not listed here. For these reasons, the best approach is to have an attorney prepare a typewritten (or formal) Will and oversee the proper execution of the Will.  The attorney can also assist in adding provisions to avoid potential conflicts or contests as well as language which makes it easier to understand the testator’s intent.

To probate a Will, it must be established in court that the Will meets the requirements of execution and that the Will was not canceled or revoked. Additionally, unless the Will is “self-proved,” proof of a handwritten Will requires testimony of two witnesses to the testator’s handwriting and proof of a typewritten Will requires the testimony of one of the attesting witnesses.

A self-proved Will is one that has attached a specific form of affidavit containing certain required statements which is executed before a notary public at the same time the Will is signed or anytime thereafter but before the testator dies. A standard notary acknowledgment alone is insufficient to make the Will “self-proved.”  A self-proved Will is admitted to probate on the basis of the self-proving affidavit and there is no need to call witnesses.

A Will that is not proved in court is denied probate.  In this event, the decedent’s property passes to his or her heirs as if she died without a Will.  Again, this further emphasizes how important it is to execute a Will which meets all legal requirements so that property will pass as the testator wishes.  After proving the validity of a Will, the next step in the probate process is the administration of the estate.

Hiring an attorney to write your Will can help you ensure that the technical formalities of Texas law are followed and that your gifts are clear and easily understood.  Spending a few dollars now will save your family and loved ones from spending more later.  Not to mention the confusion and grief  that will be avoided.

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Not only do I write Wills, I also see a lot of homemade Wills.  All Wills are not the same and while there are some similarities, each situation requires thought and detail in the way their affairs are handled.  Homemade or Will forms can cause many issues, so I thought I would present you with a “homemade” Will that I was asked to probate.  The names have been changed to protect the individuals involved.  The following is a rendition of the Will:

            “I am writing of my will mineself that dam lawyir want he should have too much money, he ask too many answers about the family.  First thing I want I don’t want mine brother Oscar get a G    D     thing I got.  He is a mumser he done me out of forty dollars fourteen years since.

            I want it that mine sister hilda get the North Sixtie Akers of at where I am homing it now, I bet she don’t get that gonoph husband of hers to brake twenty akers next plowing.  She can’t have it if she lets Oscar live on it, I want I should have it back if she does.

            Tell Mamma that six hundret dollars she been looking for ten years is buried from the backhouse behind about ten feet down.  She better let little Frederich do the digging and count it when he come up.

            Pastor Luchnitz can have three hundret dollars if he kisses the book he won’t preach no more dumhead talk about politiks, He should a roof put on the meeting house with and the elders should the bills look at.

            Mamma should the rest get, but I want it so mine brother Adolph should tell here what not she should do so no more slick irishers sell her vakom cleaners.  They noise like hell and a broom don’t cost so much.

            I want it that mine brother Adolph be my execter and I want it that the judge please make Adolph plenty bond put up and watch him like hell.  Adolph is a good bisness man but only a dumkopf would trust him with a busted pfennig.

            I want dam sure that schliemiel Oscar don’t nothing get, tell Adolph he can have a hundret dollars if he proves judge, Oscar don’t nothing get.  That dam sure fix Oscar.

            Signed: Herman Oberweiss”

Probating Mr. Oberweiss’ “will”, unfortunately, was difficult if not impossible because it has several problems.

To be a valid Will in Texas a Will must show testamentary intent.  However, Mr. Oberweiss states in paragraph two of his Will that “if she lets Oscar live on it, I want I should have it back if she does.”  This seems to indicate Mr. Oberweiss would still be alive.

Texas law also requires two witnesses subscribe their names to the Will in the testator’s presence.  Mr. Oberweiss’ Will lacks the signature of any witnesses.

Another problem area for Mr. Oberweiss is his failure to adequately identify his heirs.  Who are “Oscar”, “hilda”, “Mamma”, “Little Frederich” and “Adolph?”  They appear to be family but we do not have their last names and so identifying them is difficult.  For example, while Mr. Oberweiss is familiar with who “Mamma” is, we do not know from the Will.  Several “Mammas” could appear claiming to be the one referred to in the Will.

Mr. Oberweiss would like “Mamma” to get at least six hundred dollars, that she has been trying to find for ten years, however, we do not have an adequate description of where the money really is.  It is apparently buried behind what Mr. Oberweiss calls the “backhouse,” but where is the backhouse ?

Further, it is Mr. Oberweiss’ desire “helda” get the “North Sixtie Akers.” How do we know where the “North Sixtie Akers” is?  Apparently it is where he was “homing” at the time he wrote the Will.  But what does “homing” mean?  Where he lived is a good guess, but we really do not know that is what he meant.  What if Mr. Oberweiss was no longer “homing” the property he refers to when he died?   What then ?

It is clear Mr. Oberweiss belonged to a congregation led by a “pastor.”  While several denominations use this term, Mr. Oberweiss was obviously German and therefore would have probably been Lutheran or, possibly, Roman Catholic.  But would a member of either denomination (or several others who use the term “pastor”) have referred to his church as a “meeting house?”  Neither Lutherans nor Roman Catholics have “elders” at the congregational level.  Presbyterians do, and, on occasion, a Presbyterian minister is addressed as “pastor.”  But “meeting house?”  The term is commonly associated with the Society of Friends, who have no “pastors.”  Even more to the point, however – Mr. Oberweiss had a “pastor” and therefore could hardly have been Jewish.  Yet don’t you wonder why a well to do farmer of German descent, living in East Texas, would use Yiddish words of execration is speaking of Oscar and Hilda’s husband?

I must confess Herman Oberweiss, nor his family, really exist.  He was the creation of Will Sears.  Mr. Sears was an attorney in Houston who created Herman Oberweiss’ Will for a Law School Banquet.  Mr. Sears passed away in December of 1990.  This was one of my father’s favorite articles, so thinking of him this Thanksgiving, I decided to publish it again.

While Herman Oberweiss does not exist, this Will does afford me the opportunity to caution you on the hazards of writing your own Will using a form from the Internet or Do-It-Yourself Will kit.  You may save a few dollars, as did Herman, but in the long run the goal of a Will is to make sure your last wishes are accomplished.  Hiring an attorney to write your Will can help you ensure that the technical formalities of Texas law are followed and that your gifts are clear and easily understood.  Spending a few dollars now will save your family and loved ones from spending more later.  Not to mention the confusion and grief  that will be avoided.  THAT will damn sure fix Oscar.

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The Executor is the person who carries out the instructions in your Will and who pays the estate’s debts and taxes.  Now I do not mean the Executor pays these out of his or her pocket, but instead makes sure these items are paid with the proceeds of the estate.  Sometimes the Executor does pay these bills and therefore must keep an accurate ledger so that they can be reimbursed from the estate.  Because the Executor will have broad responsibilities and powers it is important to choose a competent and trustworthy Executor.

An Executor can be any person or institution (such as a bank or trust company) you choose.  Here are some tips on what you should consider when choosing an Executor:

• Are they experienced and competent in business matters?
• Are they familiar with your business, finances and property?
• Are they willing and able to act as your Executor?
• Are they able to spend the time necessary to perform the duties of an Executor?
• Are they able to work with the estate’s attorney and accountant?
• Are they able to provide for the continuation of your business?

Another important item to consider when selecting an Executor is what would occur if they are unable to act as Executor when the need arises?  It is best to have an alternate Executor and, if possible, a third.  The reason for this is simple.  If you do not select an alternate, then it is up to the court to do so.  The person the court selects may not be someone you would want.

The Executor’s responsibilities include the following:

• The first step is to file the the Will.  In order to do that, an   application must be filed with the Probate Court located in the jurisdiction in which the decedent was domiciled at the time of his or her death;

• A hearing will be held in order for the judge to review the Will to make sure it is proper and then to be presented proof of death; 

• Following the probate hearing, and after the judge signs an order admitting the Will, the County Clerk will issue Letters Testamentary to the individual or institution designated in the Will as the Executor (after the Executor has signed an Oath of Office);

• Giving a general notice to unsecured creditors within 30 days of his or her appointment;
• Within 60 days of the Executor’s appointment, giving notice by certified or registered mail to each secured creditor whose debt is secured by a lien on Texas real property or personal property owned by the estate

• Collecting the following documents to establish rights for insurance, pensions, Social Security, and ownership: Will, birth and marriage certificates, Social Security number, citizenship papers, insurance policies (life, health, accident, and property), bank books and statements, deeds, leases, care title/registration, income tax returns, veterans discharge certificates, disability claims, unpaid bills, property tax bills, and credit card information;
• Notify the post office, relatives, friends, employer, insurance agents (life, health, and accident), religious, fraternal, civic, and veterans organizations, and unions of your death;
• Collecting, preserving, and appraising the personal property of the estate;
• Securing the residence and reviewing the insurance coverage.
• Preparing an Inventory, Appraisement and List of Claim’s for your estate.  The Inventory, Appraisement, and List of Claims must list all the decedent’s probate assets and all claims that are owed by third persons to the estate.  (Note that the term “claims” in this context refers not to the decedent’s debts or claims the decedent owes to others, but only to amounts that other people owe to the decedent.)
• Paying all valid debts including funeral costs, fees and expenses incurred in administration, medical bills, and utilities from your estate account;
• Applying for Social Security benefits and employer identification number;Determine whether your estate has any tax liability and making sure your final tax return is filed;
• Distributing the money and property in accordance with the Will.

As you can see, the Executor plays a very important role in the administration of the Testator’s estate.  Usually the attorney handling the estate will assist the Executor with the above duties, but it still requires someone who is familiar with your affairs so that all of the above information can be collected and addressed.

While you can elect to pay the Executor compensation for their time and effort, this is not always the case.  Thus, make sure you have talked over your decision with the person you select to make sure they are up to the task.  And as always, consult with an attorney when making this choice.

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Probate is the process a person goes through in court when a person dies leaving a Will.  Remember, just because someone dies with a Will does not automatically mean they must go through the probate process.  This depends on what type of property they owned at their death and how well their Will was drafted.  If someone passed away and left a will, be sure to check with an attorney skilled in this area to determine if there is a need to probate the Will.

Only property owned by the decedent at death can be disposed of by a Will.  A Will cannot dispose of “nonprobate assets.”   What are nonprobate assets ?  They are assets which pass at death other than by Will or intestacy.  The principal types of nonprobate assets include property passing by contract, property passing by survivorship, and property held in trust.

Property passing by contract includes life insurance proceeds, IRAs and employee benefit plan proceeds, such as the proceeds payable under a pension, profit-sharing, or employee retirement plan. These assets pass outside the Will to the persons named by the decedent in the appropriate beneficiary designations.  Thus, it is important to periodically review the beneficiary designations with respect to these types of assets and to update them as necessary.

Property held by the decedent and another person and with rights of survivorship passes outside the Will directly to the survivor.  Survivorship assets typically include certain types of bank accounts, certificates of deposit, stocks and bonds, and certain savings bonds issued by the United States Government, such as Series EE savings bonds.  If these are not addressed when you prepare your Will, then all your careful estate planning could be for naught.

Vehicles, farm equipment, recreational vehicles and guns are another example of assets that could pass outside of probate, if structured properly.

Yet another category of property that passes outside of probate is property held in trust for the benefit of the decedent.  The trust may have been created by the decedent during his or her lifetime for property management purposes or by someone else, such as a parent of the decedent.  Trust assets pass under the terms of the trust rather than under the terms of the decedent’s Will.

Many people set up accounts with one of their children.  Thinking this will make it easier for the child to pay bills.  However, this could open the parent up to liabilities the child has.  Another potential problem is they feel the selected child can then gift the account equally to their siblings.  However, there is no legal requirement they do so, and if they do equally divide the account with their siblings, there are possible tax consequences.

It is important to determine the extent of one’s nonprobate assets when planning the disposition of one’s property at death.  If a substantial portion of the assets are nonprobate assets that do not pass under the Will, even a well-drafted Will may be insufficient to carry out the testator’s intent in disposing of his or her property.  Therefore, be sure to provide your attorney with information regarding all of your possessions so that he may be sure to address them when discussing your Will.

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Whether you’re sitting on a chest of gold or planning to amass one, knowing how to navigate the estate tax landscape is crucial.  You will need a CPA that can provide the basic understanding of portability for your benefit.

Estate tax, the levy on the transfer of the deceased’s estate, stands as a pivotal consideration in estate planning.  This tax, while federal, affects Texans in profound ways, influencing decisions on estate distribution and planning strategies.  Its purpose, to tax wealth transfers, impacts estate sizes variably, with specific exemptions providing some relief.

The concept of portability within estate tax legislation marks a significant shift in how spouses can manage their combined estate’s tax burden.  By allowing the surviving spouse to inherit any unused federal estate tax exemption from their deceased partner, portability offers a pathway to substantial tax savings.  This mechanism, pertinent under federal law, requires strategic application to maximize its benefits within Texas.

Portability’s benefits, while significant, come with strict eligibility criteria. The Internal Revenue Service (IRS) delineates these, emphasizing the necessity of a timely and accurate estate tax return filing.  For Texans, understanding these criteria is fundamental to leveraging portability effectively, ensuring that no potential tax advantage goes unutilized.  The deadline for filing is 9 months after the date of death.  This deadline can be extended, but again a proper filing must be made by your CPA or tax professional.

The election process for portability involves procedural diligence.  Filing IRS Form 706, a step necessary even when no estate tax is due, embodies this process’s core.  For Texans, adhering to the IRS’s filing deadlines is critical, as any oversight here can negate the opportunity for tax savings.

Married couples in Texas stand to gain a significant benefit from portability.  This provision can mitigate estate taxes dramatically, ensuring a larger portion of the estate benefits the heirs.  Through strategic use of portability, countless Texan families have navigated the estate tax landscape more favorably, securing financial legacies.

If you have recently lost a loved one, you should seek the assistance of an estate attorney with experience in handling estates AND a tax professional.  These two professionals should be able to walk you through the process of transferring assets (probate) and protect any tax protections that you are available.

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Most of us have adjusted to balancing children, work and finding some time for ourselves.  But when we add caring for an aging parent(s), it often becomes too much.  And usually it’s the “me” part that is sacrificed…until you hit burn out.

Here are some ways to leverage your time and resources so you can also take care of yourself.

Enlist Your Kids

Even the smallest child can spend charming one-on-one time with a grandparent.  If your parent lives with or near you, they can spend time together in person.  If your parent is not near you, they can Skype on the computer, use FaceTime or play multi-player online games.  Your children, no matter what their ages, will benefit from spending time with Grandma or Grandpa, they will see how you value and care for aging family members—and you will get some extra time to return phone calls, make dinner, or even catch a quick nap!

Ask About Options at Work

Check with your employer’s human resources department about resources that might be available to you. Depending on how long you expect to be caring for your parent, there may be a multitude of options available to you, including elder care research and referral services, flex time, even working from home options.  The Family and Medical Leave Act (FMLA) calls for eligible employees to receive 12 weeks of unpaid job-protected leave. (Private employers with less than 50 employees are exempt.)

Seek Assistance

There are legal and community resources that can help you make the best care and financial decisions for your parent.  A local Elder Care attorney can prepare the necessary legal documents and help you maximize your parent’s income, long-term care insurance and retirement savings, and qualify for VA or Medicaid benefits, if applicable.  He/she will also be familiar with various living communities in the area and in-home care agencies. You can also hire someone to review and verify/dispute insurance claims and medical billing.

Find Your “Me” Time

Stress is your biggest enemy and you have to find ways to reduce it.  Joining a caregiver group, in person or online, will let you share your questions and frustrations, and learn how other caregivers are coping.  Don’t be afraid to ask favors of friends and other relatives, such as picking up your kids while you go to the doctor with your parent.  You could also learn to order in dinner every now and then without feeling guilty. Learn what you need to maintain your stamina, energy and positive outlook. That may include regular exercise (a yoga class, walk or run), a weekly outing with friends, or time to read or simply watch TV.

The post How to Take Care of Yourself as You Take Care of Others appeared first on Moak & Moak, P.C. -Attorneys At Law.

Chances are, even in a small town, that judge won’t know you. They won’t know your children. And they won’t know the values, routines, or love that define your family. They’ll do their best, of course, but that choice could be a complete stranger—or even someone you wouldn’t have wanted anywhere near your kids.

The truth is, no one can replace you. But someone can carry out your wishes and provide stability, love, and guidance to your children. Your job is to choose that person now, while you can.

There’s no one-size-fits-all answer when it comes to choosing a guardian. Every family is unique, and the “right” choice for you may not be obvious at first. That’s why we help parents walk through the decision carefully—thinking not only about who can take care of your kids, but who should.

There are some of the factors worth considering:

– Relationship and Bond: Does your child already know and feel comfortable with this person?

– Parenting Style: Are their values, beliefs, and approach to discipline similar to yours?

– Location: Would your child need to move away from their school, friends, and community?

– Health and Age: Are they physically and emotionally able to care for your child long-term?

– Lifestyle and Availability: Are they raising children of their own? Do they have the time and energy to take this on?

I advise my clients it is best to name at least one backup guardian, in case your first choice becomes unable or unwilling to serve.

Raising a child is expensive, you already know this, but it shouldn’t be your chosen guardian’s burden. Ideally, you’ll leave enough financial support to cover the costs of education, healthcare, housing, and general needs. Life insurance, savings, and trusts are often used to provide for your child’s future.

The person you trust to raise your child may not be the same person you trust to manage their money. And that’s okay.  Many parents choose to name:

– A guardian to care for the child day-to-day, and

– A trustee to manage the financial side of things—paying for the child’s expenses and ensuring that funds are used appropriately.

Of course, some families choose to keep those roles combined for simplicity. But it’s important to weigh the pros and cons. The right setup is the one that gives you peace of mind.

Also, this isn’t a one-and-done decision. Your children will grow, relationships may change, and someone who isn’t the right fit now might become a great option later on.

The key is to make a decision today. Once you’ve named a guardian, it’s easy to update your plan down the road if things shift. But until you have that legal paperwork in place, the risk remains.

You don’t have to figure this out alone, and you don’t have to leave your children’s future up to chance. By creating a legally sound estate plan, you can name a trusted guardian who will care for your children if something happens to you.  You can establish financial provisions to ensure your children are provided for without burdening others, appoint a trustee to manage assets wisely and in line with your wishes, and avoid court battles and confusion during what would already be a difficult time for your family.

An estate planning attorney can make this process straightforward and personalized. They should be able to guide you through each decision, carefully, compassionately, and without overwhelming legal jargon, so you can feel confident knowing your children are protected.

This is one of those steps that most people put off, but wish they had taken care of earlier. Don’t let uncertainty or discomfort stop you. Estate planning gives you the power to protect your children with clarity and love, no matter what the future brings.

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The dissolution of a marriage frequently requires the division and disposition of real estate. Whenever that real estate is investment or business property, rather than solely a principal residence with no business or substantial amount of land, both parties and their advisors should give serious early attention to Section 1031 of the Internal Revenue Code. The stakes are high, and the window of opportunity is narrow.

A properly structured 1031 exchange gives both parties powerful options:

– Defer taxes interest-free, preserving capital that would otherwise be lost to immediate taxation.

– Use leverage to acquire more or more suitable real estate.

– Diversify into different property types aligned with each party’s post-divorce goals.

– Increase cash flow through income-producing replacement property.

– Reduce management burden by converting active investment property into passive income vehicles.

Preserve more wealth for future investment and potentially leaving a greater legacy to the heirs, an objective that parties on both sides of a marriage dissolution normally continue to share.

Consider a common scenario: one spouse receives, as part of an equitable distribution, a commercial building or ranch that neither spouse wants to manage. Without a 1031 exchange, that spouse faces an unappealing choice, manage an unsuitable asset or sell it and absorb a significant tax hit. A properly structured exchange resolves that dilemma, the spouse can exit the unwanted property and acquire replacement property suited to their goals, whether that’s a passive net-lease investment, a smaller rental property, or a diversified portfolio. That outcome benefits not only that spouse but the couple’s heirs as well.

A successful exchange depends on strict compliance with timing, ownership, and control-of-proceeds requirements.  These are not technicalities, they are absolute conditions.  Both parties, their attorneys, any mediators involved, and judges presiding over contested proceedings all need to understand that compliance with these requirements is not optional if the tax benefits are to be preserved.

Decisions made during divorce negotiations or court proceedings can inadvertently destroy an otherwise valid exchange. Common pitfalls include settlement agreements that transfer title prematurely, distributions that give a party constructive receipt of sale proceeds, and court orders entered without awareness of pending exchange deadlines. By the time these errors are recognized, it is often too late to correct them. What could have been a tax-free transaction becomes a fully taxable one that neither party intended.

In divorce cases involving investment or business real estate, a 1031 exchange can be a powerful wealth-preservation tool, but only if it is addressed before key decisions are made. Once a settlement agreement is signed, proceeds are distributed, or a court order is entered, the opportunity may be gone permanently.

The more civil the parties can be and the  earlier the issue is raised, the more options remain available to both parties, the marital estate overall, and the children.  Early coordination among the divorcing parties, their attorneys, tax advisors, and a qualified intermediary can mean the difference between preserving valuable tax benefits for the family and forfeiting them entirely through an avoidable oversight.

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Many folks I have counseled tell me they have added a trusted adult child to their financial accounts.  Their reasoning is that it gives the child access to help them. That is a perfectly reasonable step to take, but it is important to consider the ramifications, especially as it may affect federal deposit insurance for accounts insured by the Federal Deposit Insurance Corporation (FDIC). Of course, another overriding consideration having more to do with human nature than federal regulations is whether there is a trusting relationship between or among everyone whose name is on an account.

Joint Bank Accounts

Under FDIC rules, a joint account is a deposit account owned by two or more people who have equal rights to withdraw all of the deposits and to close an account. Married couples, assuming they want to share the funds in the account, like the convenience of such a joint account so that either person can write checks on the account and pay bills from it. At an FDIC-insured institution, each co-owner is insured for up to $250,000 for his or her share in all joint accounts in that institution. But if all persons on the account do not have equal withdrawal rights, the account will not necessarily be FDIC insured up to the same amount as for a true joint account under FDIC rules.

A significant risk exist when you add another to your account, it puts your assets at risk.  I often consult with clients who have added a child to their account.  While they may have complete trust in that child, there are factors that should be considered.  If you have added a child to your bank account and that child is sued as the result of an accident, divorce or contract dispute, those attorneys do not care that the account is yours.  Likewise, if your child is audited, the Internal Revenue Service will not care that it is your account.  Another example is if that child is hospitalized and can’t pay their bill.  If they are on your accounts, the attorneys for the hospital can place a lien against your account with the child’s name on it.  These are all real life experiences I have dealt with.

If the goal is to give someone limited access to a bank account when needed but not to grant ownership rights to the account, an alternative is to grant that person a power of attorney. Powers of attorney, which typically authorize someone to represent or act on another’s behalf in financial matters, can be crafted to permit the desired amount of access to bank accounts.

Credit Card Accounts

There are two different ways to give a second person the ability to use a credit card. Making that person a co-owner means that he or she will be financially responsible for all of the debt incurred with the credit card, regardless of which co-owner authorized a particular charge. In the alternative, an authorized user of the card may or may not be financially responsible for the debt, depending on the cardholder agreement. The card owner can put restrictions on authorized users, such as how much debt the authorized user can incur with the card.

Cosigning Loans

Succinctly put, a cosignor on a loan has agreed that the creditor can look to him or her for satisfaction of the debt if the debtor does not pay the debt. This obligation may well extend to any late fees and collection costs made necessary by the debtor’s delinquency. On top of that, the cosignor’s own credit rating could take a hit if the debtor doesn’t pay the debt or pays it late. All in all, the watchwords for cosigning on a loan are “proceed with caution.”

If you want someone to assist you with paying bills or managing your accounts, then you should consider talking to an attorney about the benefits of a Durable Power of Attorney.  Additionally, seeking legal advice before you cosign on a loan, would be a wise decision.

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