Is it legal to distribute funds from a joint checking account after death?

A fellow caregiver asked...

My neighbor asked me to be a partner on his checking account. I typed up a document stating what he wanted and had him sign it; I signed and had a witness sign, too. We went to the bank and he told the bank officer what he wanted done. The bank officer assured both of us that no one else could contest this arrangement. I did not write any checks on this account until recently, when my neighbor got sick and was hospitalized. Since then, I have been writing the checks for rent, utilities, and cash when he wants it. He has pretty much lost his ability to see and write his name. In the event of his death, I will close the account and distribute the remaining funds to various nonprofits. Am I completely legal doing this?

Expert Answer

Liza Hanks is the founder and owner of FamilyWorks Estate Planning, a law firm with offices in Campbell and Los Altos, California, and the author of The Busy Family's Guide to Estate Planning (Nolo, 2007).

Double check with the bank to be sure you are a joint owner on the account. If you are listed as a joint owner of the checking account--and it sounds as if you are--then you can certainly write checks for your neighbor. You could also write checks to cover your own needs, so your neighbor showed a lot of trust in adding you to his account.

When your neighbor dies, you will become the legal owner of the money left in the account and can do whatever you choose to do with it. If you donate the money to the nonprofits as directed, you should know that the gifts will legally be considered to come from you, not from your neighbor after his death.

A durable power of attorney for finances, in which your neighbor would name you to act as his financial agent, would also give you the power to write checks for him. But in that arrangement, you wouldn't be the owner of the account during his life or after his death. Most people use this approach when planning for their incapacity because they don't necessarily want to give another person their money; they just want to provide for someone to manage it for them.