Wednesday, September 7, 2011

What About the Joint Bank Account You Have With Mom?

When there a several children in the family and one child is handling a joint account created with the parent’s money the other children may wonder how that money is being handled, particularly if the parent has become incapacitated. The best situation is where all family members can talk freely with each other about such matters. However, many families find it hard to talk for various reasons, and in some cases not everyone wants the information shared. Moreover, a child who is a joint account holder with Mom may misunderstand what legal rights and obligations they have in dealing with mom’s money.  Under Virginia law a child handling money for a parent must be very careful how that money is used and can be held liable for its misuse.  For example, the son handling Mom’s money in a joint bank account that she set up in their joint names is considered to have a fiduciary relationship to his mom that requires him to handle it properly for her benefit. He can’t just use the money for himself. In fact, he can be held accountable for any self-dealing transactions, which are assumed to be improper, and if he dips into mom’s money for himself  he can be subject to claims of breach of fiduciary duty, conversion, unjust enrichment, etc. This is why it is important that he understand what he can and cannot legally do with her money and that he keep careful records. As elder law attorneys, we can help people with these matters.

Monday, September 5, 2011

What Did You Do With Mom's Money?

What if mom has several children and names one of them to hold her power of attorney? Does this mean the child can do anything he or she wants with mom’s money? Does that child  have to tell the other kids what he has done with the money if they ask? Under Virginia law, the giving of a power of attorney does not give the child complete unfettered use of the parent’s money, and accountings for its use can be required. A power of attorney is a document that names an         agent to handle financial matters. This does not give the child the power to use the money for himself or herself. Instead it is to be used for the parent as the parent has directed. The child is the parent’s agent and has a fiduciary duty to the parent. If you are a child who holds a power of attorney for your mom or dad, it is very important that you understand what powers you do or do not have under Virginia law and what records you must keep. If your mom or dad is incapacitated and you are concerned that the agent may be abusing a power of attorney or if your parent died and you don’t know what happened to the money that was being managed for him or her under a power of attorney, there are provisions in the law about how an accounting can be required. Also, if  you are a parent granting a power of attorney, it is very important that you make a wise choice about who will hold your power of attorney. As elder law attorneys, we help people with these decisions.