The pitfalls of adding niece to checking account

[Travelfreek]

So, I'm curious what others think of what transpired after my Mother in Law added her niece to her checking account in order to make it convenient should something happen to her and bills needed to be paid. My husband (only child) lived in CA and his mom (my mother in law) lived in Michigan. Her niece lived in Michigan also. So, in about 2009, as her health was beginning to fail my mother in law added her niece's name on the checking account and also added my husband (her son) to the account. The checks that were printed just showed the niece and my mother in law, however.

The revocable living trust in place showed my husband as the sole heir to everything unless he pre-deceased his mother. But in that case, our children would inherit the assets (house, money, etc.). The IRA MIL owned had my husband as beneficiary and his cousin (the niece) as contingent beneficiary should my husband pre-decease my mother in law.

So, fast forward to her death in 2010. My husband took control of house and money. As a kind gesture, he sent his cousin (the niece) a check for $1500. She said she was pleased and surprised by it and all seem to be fine. Then in late 2016 after house that was used as investment property was sold, my husband sent $1000 with a Christmas card to cousin (niece). She wrote him a snotty email about expecting half of his mother's stuff. He wrote her back asking what she meant by that. She never replied and never talked to him again. They used to call each other a couple times a month. The only thing I can think of is that she got a feeling of entitlement due to the name on the checking account. Any of you had similar problems along these lines?

I talked to her (his cousin/the niece) on the phone just once after this "blowup" and she was as as cold as ice. I suggested she call my husband and that he missed her. She said nothing. We weren't invited to her son's wedding though I was Godmother. I'll also mention not to discredit her but she's a big spender (lots of credit card debt and lives beyond means) and a heavy drinker. In spite of that, we valued her relationship with my husband (they were close all those years -nearly 60). Really kind of heartbreaking. My reason for writing this is to make sure that names being added to checking accounts are a bad idea for many reasons unless the name added is the sole heir only. My mother in law never expressed verbally to us (or in writing) that she wanted specific amounts of money or assets going to the niece. Otherwise, we wouldn't have hesitated to share some of the assets.

 

[lwp2017]

No good deed goes unpunished.

We have a very similar situation involving a niece and a great aunt.

Niece was furious and is still mad at family because she wasn’t treated equally in the aunt’s will - which had been in place for about 15 years prior to aunt’s death.

 

[gayl]

OMG! I'm sorry that you have such an ungrateful cousin! Sounds like it hurts alot.

 

[Jerry1]

Keep in mind that you have no way of knowing what the mom said to the niece. Not saying that changes anything legally, but it may be a reason for the resentment. I think more than a reason not to have someone on a checking account, it's a reason to share documents and wishes a bit more freely while living/able. I'm just glad your story didn't end with the niece clearing out the checking account for her personal use.

 

[Oz investor]

Keep in mind that you have no way of knowing what the mom said to the niece. Not saying that changes anything legally, but it may be a reason for the resentment. .

for instance i was always led to believe i would get nothing of the two estates i eventually inherited ( and without ligation , a very rare event in my family )

however i was the last close blood relative and no will made after my birth could be found ( apparently a HUGE glitch in official records keeping , but again nothing i had any control over the executors DID search )

so indeed what was said but not documented can vary a great deal from the end result

 

[jazz4cash]

I don’t necessarily see any connection between the niece’s name on the account and her feelings of resentment. Was she actively supporting the MIL’s needs in any way that may have given her a feeling that she was entitled? It sounds like her proximity to the MIL may have made it likely that she was more involved than other family members that were not close by.

 

[Travelfreek]

She lived 3 1/2 hrs from MIL and would visit on rare occasions but sometimes made a quick trip on Christmas Day for example (for which we were very grateful since flying to Mich at Christmas was something we never did - cold weather - and our full time jobs in CA). We visited every summer and my husband helped his mom with long lists of chores she saved for him. We also talked on the phone every week to her usually on Sundays and sometimes more frequently. No, the niece did not help her out but I think my MIL was just worried being we lived in CA that she may need someone to come. I also think some of her friends did this sort of thing with their family members for convenience sake. Like another person wrote, we don't know what was said but if my MIL said that to niece, it would have been nice if she told us.

 

[gayl]

He didn't have to give her anything yet gifted her $2500

 

[gwraigty]

What a situation. IANAL, just my rambling thoughts follow.

Mom wanted her niece to be able to pay the bills, but have her son inherit the money. With the niece's name printed on the checks, it appears as though the niece might have actually been made a joint owner. Legally, the surviving joint owner(s) would split the balance left in the account, regardless of Mom's intent.

Jerry1 has a good point. Maybe Mom told her niece that she was listed as a beneficiary and didn't explain what contingent means and that it was limited to the IRA only. That's why she wants half. She also doesn't understand that being named as beneficiary of an account means that other beneficiaries literally can't take a share that doesn't belong to them. I really doubt you could make her understand, even if she was willing to speak to you about it.

Yes, I had a similar problem with a relative who thought she should have inherited much more than she actually did. It made me feel like I'd lost 2 relatives at once with one death, which I guess was true.

 

[gayl]

Interesting point about the money in the checking account, I hadn't thought about that

 

[Travelfreek]

Pitfalls of adding niece or non-heir to checking account

It's true she (niece) never took money or wrote checks off the account. After MIL passed, we went ahead and closed the account that had the niece's name on it and opened a new checking account w/ just my husband and my name on it to manage the house rental etc. As I said, niece was thankful at that time when we sent her $1500 check and was "surprised by it". We also gave her daughter and her daughter's husband a houseful of furniture from the estate and let them pick through all the stuff (55 years of accumulation). It's just strange that 6 1/2 years after the passing of MIL, she freaks out about not getting half the "stuff" which by then was just money (proceeds of house and any remaining funds left). So, she never cashed the check of $1000 nor did she give her 2 kids their $250 checks each to cash that were in the same envelope. We called bank and they said checks older than 6 mos are no longer negotiable, so we are not worried about them cashing now. We did send her son who got married a check for $300 though we were not invited.

My husband was an only child and always in good standing with his parents and eventually just his mom after his Dad passed. My reason for posting is for others to not make this type of mistake for "convenience reasons". When my MIL got sick (10 weeks preceding her death) my husband and I would take alternating trips to Michigan to help her figure out everything while she was in skilled nursing and then assisted living before she passed. We spent at least 4 weeks of the 10 weeks in Michigan. It was a blessing to help her and get her situated and as comfortable as possible.

Maybe it's the niece's heavy drinking that got her to this strange place. We may never know since she never wrote or called my husband since.

 

[gayl]

Yeah. Pitfalls from best intentions.

It's a good reason to put as much as possible on autopay.

 

[Ginny]

It is a gamble putting someone else on your bank accounts as a creditor can attach them. This woman has credit card debts, so it was great that the account was not used by niece or her creditors. I do have a son who is on some of our bank accounts, but he has a good job with the government.

 

[Dawg52]

Yeah. Pitfalls from best intentions.

It's a good reason to put as much as possible on autopay.

That's what I have done. And auto withdrawals from brokerage acct to my checking acct. At some point I will probably have to set up a nephew to oversee financial accts, but putting it off as long as possible. The nephew I have in mind is very conservative and I doubt he would do anything to screw over his brother and sister(all beneficiaries of my estate) but in no hurry to relinquish control anytime soon.

 

[Bryan Barnfellow]

If nothing else, your niece is a terrible negotiator! Six years late and then puts out her initial position ("half") but never comes back to the table to discuss. It sounds like you and your husband are exceptionally kind and generous people. She blew it.

-BB

 

[JoeWras]

Oh boy. Cousins! I love mine, but how much do I really know about them? Tread carefully. They are dangerous to get involved in any accounts or estate activities.

As others mentioned, go autopay first. Secondarily, most accounts these days (especially utilities) have a way of recording a person as a contact point should things go sour. Easy to do and generally silent and transparent until TSHTF. No legal tie ins like a joint account.

Quick story: my dad's cousin's wife started "helping" my dad without our knowledge. This woman came from nowhere. Dad would tell us stories and we thought he hallucinated them. Finally, we were visiting dad when she knocked on the door. It was true!

With context, dad could explain he never liked this person or that cousin. He loved that cousin's brother. That's where we all got confused because we thought this should be OK.

It was not OK. I finally remembered her from when I was just a child. They moved away for 40 years, then came swooping back (along with their problems.)

Dad was too kind to tell them to take a hike. For me? No problem. A first cousin once removed in-law? SEE YA! It was a close call. Thankfully, she never showed her face again. Got confirmation from the other first cousin once removed (the brother) that we did the right thing. He doesn't like his SIL either!

 

[MrLoco]

Someone in my family had a similar situation years ago where a family member added them to a bank account.
I ran it by my CPA and he said in the eyes of the IRS the person who adds another person to an account has in effect "gifted them" half of the value of said account. Makes sense.
He also said that even if a gift tax return is never filed this type of event is considered a low priority" by the IRS and nothing usually ever happens.

 

[ivinsfan]

How much money are we talking about here? I can kind of see this both ways, apparently the niece did express herself thinking she was half owner of that account..even though you said it was "snotty"..did she want half of everything, half of the checking account...an actual phone call when this stuff started happening would have at least given both parties a chance to speak their piece. Sniping by email least productive way to deal with stuff like this.

And BTW don't blame your deceased MIL for the problem....you could have more generous from the get go if you wanted to.

 

[Bestwifeever]

Your MIL added a heavy-drinking, big-spending, credit-card debt carrying niece, as you somewhat uncharitably described her, to her checking account two years before her death because your DH was so far away in case something happened. Niece never abused the account in spite of her known failings and apparently was close to your MIL her whole life—perhaps she was considered a daughter by your MIL. I think I would have given her half or even the entire checking account just for being on watch as the closest relative for a long time. If it matters to him, this is something your DH would have to try to patch up, although that ship has probably sailed.

 

[gwraigty]

New day, new thoughts. Please don't take any of this personally. It's not meant that way. Intentions may well have been good all around. This is a great discussion to have, BTW. I'm sure it may be of help to others faced with a similar situation. Your main point is an excellent one. One of the problems is that your MIL's intent conflicted with the law. You can find many similar stories online. It's clear that the surviving joint owner(s) inherit the balance in the account. However, the niece appears not to have known this, if she was surprised and pleased at getting $1500. Why was that amount given? Did it have any relationship to the balance in the checking account?

Maybe more importantly, what mechanism was used to close the account? According to this website:

Joint Accounts are Usually Bad

"(Side note: Many bank officers don't like the signature authority law. When you give your child signature authority, your child's name usually is not listed on the check. It is more convenient for the bank to have your child's name as a joint owner on the account because the bank doesn't ever have to refer to the signature card. What's convenient for the bank is not necessarily what's best for you.)"

If only MIL and niece were listed on the checks, it appears as if your husband had signature authority only. (I had a joint account with 2 other people once and all 3 names were on the checks.) Like a POA, a signature authority ends upon the death of the account owner. Granted, there's nothing to stop someone with a POA or signature authority from writing out a check for the balance and depositing the funds in a new account in their name, without telling the bank of the account owner's death. Unless your husband was made a joint owner at a later date and new checks just weren't ordered, but your OP doesn't read that way. Even so, half the money (in my state at least) would legally have belonged to the niece.

Niece doesn't win any awards in my book and it's nothing to do with her alleged snottiness or heavy drinking, which are really totally irrelevant in this situation. Her withholding money that was supposed to go to her kids is rotten. Not cashing a $1000 check is beyond words, even if she thought she was entitled to more. BTW, no way would I have sent $300 to anyone for a wedding I wasn't invited to. And any money or furniture given to her kids is irrelevant to anything the niece should have gotten.

Which might well be nothing, from a practical and moral standpoint, if not a legal one. They are entirely different things in this scenario. If she did absolutely nothing for your MIL in the area of care giving or financial management, then I can understand why your husband thought he should take the money in the checking account, especially since the end result closely matched MIL's intent, exception being stuff/money you voluntarily gave to niece and family. If she had been taking care of MIL and having to manage MIL's finances, it'd be easier to feel she deserved something.

Niece may have forgotten all about it had she not been reminded with that $1000 check in 2016. Which also begs the question, why is this suddenly being posted in 2018?

 

[Travelfreek]

Pitfalls of adding niece or non-heir to checking account

The reason I'm bringing this up here is because it's money related and estate related. My mother in law's intentions as far as we knew was to have someone pay her bills that lived somewhat local to her if she landed in the hospital for a period of time. As far as why I'm bringing it up now is that it's been hard to see a relationship terminate that was 58 years strong (it's been almost 2 years since they spoke). I wish she (cousin/niece) would write a letter or call my husband or he could perhaps call her and say what exactly were you expecting and can we patch this up?

As far as why I sent $300 check to my Godson for his wedding last November is because he didn't cause the problem. His mom did. We are still in contact w/the daughter also and send her daughter birthday gifts and Christmas gifts. I do wonder what would have happened if we never sent the 3 checks to her after selling the house in late 2016. My MIL's niece would visit her a few times a year and stay at a hotel overnight nearby. They would also chat on the phone every few weeks. She never handled my MIL's finances because once my MIL got to the point where she was going downhill, I flew out and got all her direct deposit and auto bill pay going for her for which she was very grateful. Prior to that she was very old school - getting her Soc Sec check in mail and then driving to bank to deposit it every month. She wrote checks for all her bills and balanced her checkbook to the penny every single month. She was a sharp woman. She just never articulated that she wanted a specific amount of her money going to niece. And as I said, the trust left all to my husband. We did give a $1500 check to one of her best friends who took her to chemo regularly. In fact, I've become good friends with that woman (a nice blessing for me). Bottom line is it is something my husband needs to handle if he cares to try to mend the fence. He was honestly so blown away and shocked by her response that I don't know if he'll go there.

 

[gwraigty]

And as I said, the trust left all to my husband.

I'm truly sorry for the emotional upset that this has caused. I hope that the pain of this broken relationship heals with time. I know that it took awhile before I experienced peace with a similar situation.

I don't know much about trusts. Does the language of a trust which left all to your husband negate the fact that this was a joint checking account with the niece though?

Just like being named as a beneficiary on an account trumps a will.

 

[Travelfreek]

Pitfalls of adding niece or non-heir to checking account

The adding of the niece's name on the checking account wasn't mentioned in the trust whatsoever. It was just a random thing my MIL did when she started to get nervous about her health. Many of her friends did this with their children and since her only child was across the country, I think she decided the niece would be the logical one. The niece also got a copy of the trust which showed her as a successor trustee but not as a beneficiary. I just think adding someone's name to a checking account can cause all kinds of problem that are not intended. I read online that attorneys recommend against it when there's multiple children but only one is named on account for convenience reasons.

 

[jjquantz]

This is just another example of why it is important to have conversations with ALL of the people who will (or who might expect to) inherit your stuff. DFIL so thoroughly screwed up his estate that we are still straightening out minor details 10 years later. He had not successfully re-titled properties into the trust he had created, most funds were in accounts that had specific beneficiaries (not bad in and of itself), and he set up a rather large account as a TOD with his live-in partner. However, the distribution instructions in his will were in dollar amounts and not percentages and so could not be carried out due to insufficient funds in the probate portion of the estate. All in all it was a money maker for a lawyer to figure out a solution for settling his estate. Fortunately, everyone behaved as adults and there were no legal challenges, but it could have gotten ugly.

 

[ivinsfan]

The road to you know where is paved with good intentions.

You don't live close, your husbands niece lives closer, Mom worried about being able to handle her bills and came up with a solution that seemed to work. Your niece agreed to be there if Mom needed help with the checking account. Now Mom is gone and the family is in disarray. Most certainly not what Mom intended when this whole thing started.

How can it be fixed, I don't know since you don't live close enough for a face to face, but one of then is going to have to reach out and the other one is going to have to listen without getting PO'd….I hope it works out at 60 time passes way too quickly.