Couple Makes Basic Planning Error and Loses Life Savings

A Pennsylvania couple may have lost their life savings by making a fundamental estate planning mistake.

John DeStefano, 79, and his wife, Adeline, 83, have health problems. Four or five years ago they decided that in the event they became incapacitated and needed someone to pay their bills, they'd like their daughter, Cindy, to have access to their money. So they added Cindy's name to their bank savings and checking accounts.

Until recently, there was $77,362.20 in the accounts -- the DeStefano's life savings. Now all the couple has is a check for $22.99 from the bank. The story of how this happened illustrates why it's so important to consult with a professional before making estate planning decisions.

As soon as Cindy's name was added to the accounts, the money became available to pay her creditors. Cindy and her husband, Scott Opdyke, took out loans at the bank for their trucking business. The couple later became estranged, but Cindy believed her soon-to-be ex-husband was making payments on their loan.

Unfortunately, he was not, and so the bank took the money it was owed from an account it found that had Cindy's name on it and had sufficient funds to repay the loan. Although the DeStefanos had neither cosigned the loans nor had any interest in the corporation Cindy and Scott Opdyke created, putting Cindy's name on her parents' accounts essentially made their money hers.

The DeStefanos made a fundamental planning mistake by adding their daughter's name to their bank accounts, Jeffrey Marshall, an ElderLawAnswers member attorney in northeastern Pennsylvania, told the Times Leader, a newspaper in Wilkes-Barre.

Not only did it put the account assets at risk to Cindy's creditors, Marshall said, but it also could create an added tax problem if their daughter preceded them in death.

"Here's what they should have done," Marshall said. "They needed to put her on as power of attorney, not as co-owner."

With a power of attorney, Cindy would have been able to write checks and have access to her parents' accounts without being a co-owner.

Attorney Marshall says there is one ray of hope. By not considering the relative time the parties owned the accounts and their contributions during the lifetime of the accounts, the bank may have violated a Pennsylvania statute called the Multiple Party Accounts Act.

"If you have parents who have bank accounts and they want to put you on for convenience, don't do it," Cindy told the Times Leader.

Attorney Marshall has offices in Wilkes-Barre, Williamsport and Jersey Shore. Visit his ElderLawAnswers home page.

Learn more about powers of attorney.