Dear Moneyist,
My sister was trustee of our mother’s accounts. When our mom went into the nursing home and was incapacitated, my sister started writing checks in large amounts to her children—$10,000 at a time and, although her name was on the accounts with mom, it was to pay her bills, but my sister never paid them.
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At the time of death, she did pay a couple of bills, but never filed taxes or paid her nursing home costs and many other bills. She also closed accounts and transferred money to her personal account claiming nothing was left. She refused to give anyone an accounting. She’s a single mom of two kids who quit her job and has been going on many vacations and buying expensive things.
How do we make her pay up? Her name was also on the accounts does that mean she gets to keep it all?
Distraught Daughter
Dear Distraught,
There are a lot of unknowns here. But let me first deal with the issue of a trustee. Trustees are not there to write checks for their friends and family. They take responsibility for a family member’s bank accounts to pay necessary bills for medical costs, groceries, rent, utilities and, yes, nursing home costs. They are supposed to taker care of the needs of the elderly relative. Your sister appears to have abused that privilege. Trustees are required by law to follow those mandates.
If you sister was, indeed, a trustee and a trust was set up for this purpose, she had a fiduciary duty to act in your mother’s best interests. Part of that responsibility involves keeping receipts and being completely transparent, informing family members of transactions. In such cases where a person did not act responsibly and funds were misappropriated, the bank in question has been held liable. But these cases are complex, and that’s not always the case.
But there are other parts of your letter that remain unclear. Was your sister a co-owner of this account or a co-signer? If it was the former, your sister is a joint owner and, unfortunately, can spend the money as she wishes. She would also be liable for any debts on that account after your mother’s death. If it was the latter, your sister has the right to sign checks on your mother’s behalf. If she overspent, the co-signer would be responsible for those debts.
“If the person did not intend the joint owner to keep the asset on death, but instead only added the joint name as a convenience, then courts can and do order the asset to be turned over to the estate and shared with the other beneficiaries,” according to Andy and Danielle Mayoras, lawyers based in Troy, Mich. “This also applies to brokerage accounts, stocks, and other investments. The key is always the intent of the person who added the name at the time it was created—not afterward.”
If your sister was merely a co-signer, then you should hire a lawyer—you may find one who would take on your case on a contingency basis—and immediately contact the bank in question. The fact that your mother handed over control of her finances to receive help with necessary bills, and your sister reneged on that help, should also make this a stronger case. In some cases, but not all, banks have been held liable for the money withdrawn from accounts by a personal representative.
Many people don’t understand the difference between being a co-signer and a co-owner on a bank account. There are so many cases of siblings listed as co-owners (rather than authorized signers) on those accounts who have emptied their parent’s bank account before and after they died. Sometimes, siblings who have taken on this responsibility did not keep enough (or any) receipts and have been wrongly accused of emptying a parent’s account.
Find out your sister’s status on this account first and, once you’ve done that, you can decide whether or not you should pursue her for these misspent funds.
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