Case Study 3. The dangers of making someone a co-owner of a bank account as joint tenants with right of survivorship.

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Mary is a widow with three children. In her will, Mary leaves her property equally to her three children. As Mary gets older, she is concerned that she may become ill and forget to pay her bills. She wants to give her youngest child, Jane, legal authority to write checks and make deposits in her account. She and Jane open a joint account with a right of survivorship. As Mary's health declines, she sells her house and her farm and deposits the sale proceeds in her bank account. Eventually, everything she owns is sold and the money is deposited in her bank account.

1. The bank account may be subject to Jane's creditors.
True
False

2. Jane could withdraw the entire amount in the bank account and deposit it in another account in her name only.
True
False

3. Mary has made a gift of one half of the account to Jane.
True
False
It depends

4. At Mary's death, what will happen to the bank account she co-owns with Jane?
A. It will be split equally between her children as directed by her will.
B. Jane will get all of it.
C. Jane will get all of it, but she will be required to share it with her brothers and sisters.

5. Instead of opening a joint account with right of survivorship with Jane, Mary had the following options:
A. She could have opened a personal agency account naming Jane as her agent.
B. She could have executed a durable power of attorney naming Jane as her agent.
C. She could have signed a card at the bank giving Jane authority to make deposits and withdrawals from her account.
D. All of the above.

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Prepared by Carol A. Schwab, J.D., LL.M., Professor and Extension Specialist, NC State University.

This publication is provided as a public service and is designed to acquaint you with certain legal issues and concerns. It is not designed as a substitute for legal advice, nor does it tell you everything you may need to know about this subject. Future changes in the law cannot be predicted, and statements in this publication are based solely on the laws in force on the date of publication.

Date: October 2001