Q: My mother is an assisted living facility and while going through some of her papers, I found that there is a bank account worth about $120,000 in her sole name that I am listed as a transfer on death (TOD) beneficiary. I have 2 other siblings that are not listed on this account. What are my rights as to this account?
A: The rule is that while your mother is alive you only have an expectancy interest in this bank account. You have no present interest in this bank account and cannot withdraw funds for your personal use. If you are your mother’s agent under her durable power of attorney, you have the right to withdraw funds for solely for her use and benefit. The account is solely your mothers until her death, and you have no right to the funds during her lifetime unless she makes a gift.
What this means is that if you remove funds from this bank account without your mother’s permission or with your durable power of attorney before her death for your own personal use, you will destroy the expectancy interest. Destroying the expectancy interest essentially means cancelling the TOD designation on the account and losing your right to inherit the account at your mother’s death.
If your siblings or the other beneficiaries of your mother’s estate discover any removal of funds for your personal use, they could contest the same in an accounting or turnover proceeding in the Surrogate’s Court. At the end of the proceeding, after spending significant money to defend yourself, you could lose the right to the monies remaining in the account at your mother’s death and the monies you took despite the fact that you were named as TOD beneficiary on the account. You could then be ordered by the Court to return these funds to the estate with interest of up to 9% from the date the funds were removed for distribution in accordance with your mother’s last will and testament.
Do not make the mistake that many people make of assuming that since you are going to inherit the account anyway, you can take some of the money out during your mother’s lifetime. This could have unintended consequences and cost you a lot more money in legal fees and interest if your removal of the funds is contested after your mother’s death by the other beneficiaries of her estate.
– Nancy Burner, Esq. & Kera Reed, Esq.