Case Study 6 - The dangers of making someone a co-owner of a bank account as joint tenants with right of survivorship.

Answers for South Dakota Residents

The following answers are based upon South Dakota law as of January 2005. The laws in other states may be different. Laws are subject to change, so please ask your attorney for answers to specific questions.

1. The bank account may be subject to Jane's (her youngest child’s) creditors.

South Dakota Answer: True.

South Dakota law does permit a claim against property held in joint tenancy.

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

South Dakota Answer: True.

As a joint tenant, Jane can freely withdraw any amount from the bank account.

3. Mary has made a gift of one half of the account to Jane.

South Dakota Answer: It depends.

For gift tax purposes, Mary has made a gift of one-half of the account to Jane, however, an argument could be made that it was not a gift but rather was set up for convenience purposes only and was not intended as a gift to Jane.

4. At Mary's death, what will happen to the bank account she co-owns with Jane?

South Dakota Answer: B.

Jane will get all of it, however, Mary’s other children could argue that the property was transferred to a joint tenancy account for convenience purposes only and that it was Mary’s intent that they all three share equally the funds in the bank account.

5. Instead of opening a joint account with right of survivorship with Jane, Mary had the following options:

South Dakota Answer: D. All of the above (A, B, and C).

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.

Return to Advance Directives Case Study 6.

View the Communicate Your Advance Directives for Health Care learning lesson.

Credits

Adapted for use in the Legally Secure Your Financial Future: Organize, Communicate, Prepare program.

Content Development
Reviewed and adapted for use by South Dakota audiences by:
Anne Marie Feiock, JD,
Young Lawyers Section President, South Dakota Bar Association.

This information is provided as a public service and is designed to acquaint you with certain legal issues and concerns. It is not intended to be 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 these materials are based solely on the laws in force on the date of release noted on this page.

This document is for non-profit educational purposes only. This document may not be used by a profit-making company or organization. When used by a non-profit organization, appropriate credit must be given to the Cooperative Extension Legally Secure Your Financial Future: Organize, Communicate, Prepare education program. Materials for this program were developed by a team from six land-grant universities. The program is included in the program toolkit of the Cooperative Extension Financial Security in Later Life national initiative. For more information go to: http://www.csrees.usda.gov/fsll.