Joint Family Bank Accounts

30 Apr Joint Family Bank Accounts

You are on your mother’s bank account “in case something happens,” or just to make it easier to pay her bills. You recognize you need bankruptcy protection and you do not want to put your mother’s money at risk. The deposits only came from your mother; you have NEVER deposited any of your own money in it. You are PROBABLY okay, but I would suggest doing more.

First: This is limited to Massachusetts law. Please see an attorney if you are in another state. Please see an attorney if you are in Massachusetts! This is no time to rely on Internet advice. A bankruptcy trustee has the rights of any creditor (and sometimes more). Any creditor can grab the account if your name is on it, and then you have to fight in court to prove that it is only your mother’s money, so you have to pay an attorney for that litigation, cross your fingers, and hope to win.

Perhaps you can change the account to a trust account, sometimes called ITF (in trust for), with you as the trustee. Be absolutely sure that your mother’s Social Security number is used for any interest, if it is a savings account. Use of your own number might mean that the interest is yours. Ouch! Some banks or credit unions might require an actual written trust document, which has its additional attorney fees.

Your mother can close the account, or simply withdraw all the money, and open up a new one in her name alone. Be sure that you do not sign any paper for this, as it can be viewed as giving your money to your mother.

This all applies to an account joint with a child as well. Be sure the account becomes one called a trust account or a Uniform Transfer To Minors account.

Be safe. Plan ahead. See an attorney.

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L. Jed Berliner practices exclusively in consumer bankruptcy, foreclosure defense, and related consumer protection litigation such as credit card defenses and suing debt collectors. He established his Springfield, MA practice in 1988. Attorney Berliner is a regular and active contributor to the Bankruptcy Law Network, the Bankruptcy Roundtable, and the National Association of Consumer Bankruptcy Attorneys, three specialized consumer bankruptcy forums on the Internet, and is an informal mentor to regional practitioners. He is recognized by his peers as an expert in consumer bankruptcy issues. He thoroughly enjoys being rated "excellent" in his client surveys.

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