My Business Went Belly Up So The Bank Took My 87-Year-Old Mom's Life Savings

The Grim Reaper of the recession harvested Rich’s door and screen company, leaving him with unpaid debts. Then the real nightmare began. Bank of America seized his elderly mother’s life savings to pay off Rich’s line of credit because she had added Rich’s name to the account to protect the funds in case she became incapacitated.

Now both Rich and his mother are sick to their stomachs. He writes:

My partner and I tried to salvage our company by using our retirement to fend of this option to no avail.

Bank of America then proceeded to seize all of my mother’s savings from her B of A savings account with all the money she has in this world 27,500.00.

Two years ago my 87 year old mother asked me to sign on her account in the case that she were ill and not able to get to the bank and I complied.

My mother is on social security and has been for the last 20 years with no other income.

This was her money and I had no access at any time, nor did I ever deposit or withdraw funds at any time and that money was not mine and never to be it was saved from her social security.

I was not ever aware of the funds that she had and the account number was never information that I was privy to.

Mom was to use these funds to enter a retirement center this winter and now cannot.

In May of this year I was forced in bankruptcy protection as I had no other option with zero income In 2009.

This money was my mothers and only hers and I feel this is criminal and I want these funds returned to her account and I will do whatever is necessary to accomplish this.

It’s doubtful BofA crossed any legal lines here, but it just seems wrong that Rich’s mother has to suffer due to a technicality. What would you do if this happened to you?

Comments

Edit Your Comment

  1. Beeker26 says:

    Very sad. Unfortunately I don’t think there’s much you can do. I’m no financial whiz, but isn’t the proper way to do this is via power of attorney? Adding your name to someone else’s account is never a good idea, pretty much for this reason.

    • PsiCop says:

      This. I’m no fan of lawyers but it’s at times like this that they’re necessary. Unfortunately in this case, hindsight is of no value, but others can learn from this.

      • Loias supports harsher punishments against corporations says:

        See below. There are probably several ways that money was protected. A lawyer would be quite useful to find his own loopholes and technicalities.

    • outoftheblew says:

      A friend and I are both only children with a parent who is single and has no other family. It’s pretty crucial to have our name on our parent’s account so that if/when something happens, we can access their money immediately, rather than wading through red tape to get to it.

      In Rich’s case, with his financial tangles and the large balance of the account that his name was on, hindsight shows they should’ve thought through this differently. I don’t know that I’d have done anything different than him in the same situation, though.

      I’ve also learned, at least at my bank, that you can never remove the name of a joint account holder, even if that person wants to be removed. The only way to do it is to close the account and open a new one.

      • Dover says:

        Using a form I’d found online for free, I gave my brother power of attorney to close my account at a small credit union (I had moved away but they insisted it be done in person) and they didn’t give him any trouble.

        I understand your desire to ensure immediate access to your parent’s money, but I don’t think having your name on the account is the best method. Why not have your folks go into a branch of their bank with a PoA and have it notarized and registered with the bank in advance?

        • FatLynn says:

          Agreed. I have used PoA before (when I left the country for an extended period of time), and it is easy.

          • Kitten Mittens says:

            Banks aren’t required by law to recognize POAs and in fact many are becoming more reluctant given the increase in elder exploitation.

            • Nigerian prince looking for business partner says:

              But does that mean a PoA should not be attempted at all or the bank shouldn’t be contacted in advance regarding their policies?

              • Kitten Mittens says:

                No, you should definitely get a POA, just check with the bank to make sure they will recognize it or if they have their own forms. Most online POAs are too broad.

            • Elphaba says:

              Maybe it is because we aren’t old and are married, but other than Verizon who sucks, I’ve had NO proplems using my husband’s POA while he continues to be deployed to Iraq. I have opened and closed bank accounts, purchased and financed a car in both our names, sold a car, accessed his student loan accounts, etc. Like I said, other than stupid Verizon, no one’s given me any hassle doing so.

            • mythago says:

              What are you talking about? A power of attorney, if properly executed, gives the person holding the POA the legal right to act on the account-holder’s behalf.

              • Kitten Mittens says:

                Even if drafted properly and properly executed, banks often have their own forms and CAN require their own form over anything done outside the bank.

                • mythago says:

                  I’d be interested to see a bank try to argue in court that it has the right to ignore state law on POAs. That aside, even if they are anal about their own forms, that is something you find out when you go into the bank ahead of time with the POA to let them know you have one, in case of an eventuality. Not blaming the OP, it’s just sad that he didn’t know about this.

                  • Kitten Mittens says:

                    I’m sure a bank wouldn’t have anything in their new account disclosures about how they can choose to ignore such documents and require their own. Banks have never shown the ability to have fine print on anything….

                    Maybe you’d like to show me a statute or any case law that makes a power of attorney document legally binding on a financial institution under all circumstances? New Jersey has a pretty liberal law – and even then the law allows a bank to refuse to acknowledge it under a laundry list of exceptions (including they are unsatisfied that it was properly executed). In other states the law often absolves them from liability if they incorrectly rely on a valid document, but I’m unaware of any state law – either codified or case law that makes a bank recognize a POA. But please, enlighten me.

                    I also know for a fact that BOA will not allow a power of attorney to open a new account. A branch manager showed me their internal policies after I complained about this for a client of mine. SunTrust here in Atlanta was more than happy to help.

                • Pax says:

                  Bank policies cannot trump the Law itself.

                  • Kitten Mittens says:

                    What law, exactly, would it be trumping? Cite, please.

                    • Jezz1226 says:

                      Florida’s statute on Durable Power of Attorney: http://www.leg.state.fl.us/statutes/index.cfm?mode=View%20Statutes&SubMenu=1&App_mode=Display_Statute&Search_String=power+of+attorney&URL=0700-0799/0709/Sections/0709.08.html

                      Note subsection 7 for the rights and limitations, if allowed in the POA the holder of the POA has the ability to act as if they were the one who transferred it, that is the point of it and banks cannot deny the POA holder to do anything that the person themselves can do

                    • Kitten Mittens says:

                      Right, almost all states have this – and it’s entirely too vague and leaves too much room for interpretation. The bank only has to question the validity of the document or the execution and they can refuse to acknowledge it.

                      The same statute you link has specific provisions for the “unreasonable refusal of a third party to allow an attorney in fact to act pursuant to the power” (subsection 11) – how much is an agent willing to pay an attorney to argue that the bank’s refusal was unreasonable? A bank will usually back down if you go through their legal department, but to pretend like a bank won’t refuse to accept a power of attorney – which is my only point here – is absolute ignorance.

                  • OutPastPluto says:

                    Most banks do not infact operate as real banks any more.

                    Check your checks. If you see the initials N.A. at the name of your “banks” name then they managed this relevant legal maneuver and no longer really banks and aren’t held to any of the legal obligations of banks.

                    …as if you needed any more reasons to hate BofA.

                    • Kitten Mittens says:

                      Um, “N.A.” just means national association.

                      Which just means it is nationally chartered, can open branches in other states (subject to certain restrictions) and subject to federal laws instead of confined to the geographic and banking regulatory schemes of a particular state.

                • EcPercy says:

                  This is incorrect. If you have a POA that has been filed with the court the bank has to accept it. Already gone through this myself.

      • K-Bo says:

        POA would allow you access before anything happened. At anytime after they give you the POA, you can use it. My grandparents gave my dad poa when they were still alive so that he would be able to take care of paying caregivers and doctors from their account.

    • kobresia says:

      Yes, you’re exactly right.

      I don’t want my finances to be linked with my parents’ finances, just in case something happens to them, so I gave my dad PoA so he can help-out with some of my business affairs, and he can also manage it for me should I become incapacitated.

      If and when it ever comes time for me to have to help manage my parents’ finances, I’ll simply accept a PoA for them to return the favor, to make sure that their assets wouldn’t be affected by my debt or other liability if my business ventures take a wrong turn

      I think of PoA as a one-way street, it allows someone else to help manage assets without becoming entangled in them.

      All having additional names on the account or other asset does is allows creditors to argue that you are an owner of those assets, and they’re fair game for seizure. If your name is on it, it’s yours, even if it’s not really yours.

    • wickedpixel says:

      The article doesn’t say what state they’re in, but in CA, social security benefits can’t be seized to pay off a debt. The OP might want to check his state law on that.

    • barbcole says:

      The difficulty is your normal power of attorney is only valid so long as the person giving it retains their capacity to understand that it remains in force, what that means, how they revoke it or otherwise control how it is used, etc.

      Normally one wants their child on their accounts to help in situations where the parent is incapacitated — whether temporarily or permanently. The event that incapacitates the parent also voids the power of attorney.

      The power of attorney should be limited to situations such as an elderly parent that isn’t mobile, yet retains their mental functions. It’s difficult for them to make it to the bank or other places to conduct their business, but they still have full understanding of what they want done, who they’re asking to do it, and reading the statements and confirmations to ensure what they wanted done was done correctly.

      By adding the child to the accounts, the bank can normally consider the actions/desires of one account holder only. So a child could withdraw the entire balance, pay whomever they want, etc. without ever having to address the parent and their mental capacity or ability to give legal instructions. This is important if a parent develops Alzheimer’s or something similar. The child can get things done without having to mess with bank red tape. Otherwise the bank may legitimately require some form of guardianship be established before they release funds to the child.

      The obvious downside, it makes the asset both the parent’s and the child’s. A problem when debts are owed, bankruptcy is considered, etc.

      The correct way to do it, that most people don’t do because it requires a lawyer and some initial red tape, is a trust. Move the assets into the trust for care and needs of the parent. The initial formation documents can specify that the child would automatically become trustee if the parent is incapacitated.

      In this case, the child would not be intermingled as owning those assets (at least until the parent dies and the trust disperses the funds somehow). They are merely custodian/trustee.

      I would love to see more states establish statutory forms for setting up this type of trust (i.e. plain language prepared forms with instructions designed to allow people to form the basic trust without having to engage a lawyer).

      It’s not unusual for the estate to have enough money that some concern is warranted, but not enough to justify lawyers fees. By the time you’ve paid the lawyers fees, you’ve spent away the funds that the lawyer was supposed to be protecting.

      • Sudonum says:

        IANAL But I’ve been given POA in several instances before. The whole point of a POA IS to allow someone to act on your behalf in the event you’re incapacitated. A (Standard) Durable Power Of Attorney remains in effect until the party that granted it either revokes it or dies.

      • Robert Nagel says:

        A durable power of attorney works even if the grantor is incapacitated.

      • Kitten Mittens says:

        This is patently wrong. A durable power of attorney survives incapacity.

    • macoan says:

      Yup – Adding someone else to your account is always a bad idea.

      Similar – my mother-in-law would NOT put my wife on their insurance when she started to drive, she had to be on everything by herself (they helped pay for it since it cost more) – but the point was if my wife was to ever get into an accident where she was sued, other people on that account could be held responsible (aka – parents in law could lose all their money also)

      Co-signing loans… adding people to your accounts… all bad ideas.

  2. Etoiles says:

    If he’s in bankruptcy protection for that business, he has a lawyer, right? So ask that lawyer about it for starters.

  3. Loias supports harsher punishments against corporations says:

    Did he created an Limited Liability Corporation (LLC) with his business? If so, then the bank cannot obtain personal money/income to pay for corporate debts.

    • skylar.sutton says:

      Exactly. OP is SoL and should have consulted a proper attorney and accountant. As a sole prop debters are entitled to any and all assets (personal or company). As an LLC or S-Corp they would have been limited to just company assets… this whole mess would have been avoided.

      Not to sound callous, but there are already laws around to protect against this situation and the OP sealed his own fate.

      • SuperSnackTime says:

        Ditto. This is terrible and horrible, but LLC’s have been around for a long time to ensure this type of thing won’t happen. They are cheap and affordable and easy to create, I am very unsure of why this unfortunate gentleman did not consider this route in the first place. I know “hindsight is 20/20 and don’t judge the OP” and all that, but the benefits of LLC’s are not mysterious or inaccessible to us ‘regular folk’ by any stretch.

        • Loias supports harsher punishments against corporations says:

          If you are to start your own business, the first step is to find a small business lawyer and accountant, far before you ever make a logo.

      • Kitten Mittens says:

        Unless his LLC/S Corp/Whatever didn’t have good enough credit to get a loan without an officer/partner/owner’s (i.e. his) guarantee. Then he’d be in the same boat.

        • BBBB says:

          “Unless his LLC/S Corp/Whatever didn’t have good enough credit to get a loan without an officer/partner/owner’s (i.e. his) guarantee.”

          I ran into this when I had a small business – every supplier, bank, landlord, service, etc. had a personal guarantee in the standard credit agreement. None of them would consider removing it unless I showed the company had major tangible assets (like owning a building) that they could have a lien on.

          In reality, the corporation or LLC only helps protect assets when there is a lawsuit or other debt that is not from a credit agreement.

          —-

          In this case, if you can prove that the money in the account was never co-mingled with non social security funds, you might have a chance.

          from the michigan asset protection lawyer blog:
          “No creditor (other than the IRS) can seize your social security benefits for payment of debts.”

    • sirwired says:

      It takes a lot of care, money, and overhead to create and maintain an effective LLC. It’s not a cheap, easy, one-time thing. It has to be set up properly, have a well-written charter, you must hold regular shareholder meetings, issue stock, and you need noticeable separation between the corporate assets and your own (not just different account numbers.) Otherwise, it’s largely useless; all it will do is slow down lawsuits a little. (The process of getting through one is called “piercing the corporate veil.” Wikipedia has all sorts of juicy information as to how this is done.)

      For most tiny business owners, incorporating is usually a waste of time and money. Once you get bigger, it is a good thing. And certainly the services of an accountant and lawyer can be helpful at any time.

      And in this case, it wouldn’t have helped anyway… no bank will lend a tiny corporation with no significant assets (and little profit) any money; they’ll demand a personal guarantee of funds, making your shiny new corporate charter good for little but toilet paper. (Once you provide that personal guarantee, it makes it that much easier for any litigants to argue your corporation is a paperwork fiction.)

  4. dragonfire81 says:

    That really really sucks, BUT since his name was on the account I don’t think OP has a leg to stand on. Most banks have policies that allows them to take from funds from one account to pay off another. Really rough way to learn a lesson.

  5. milrtime83 says:

    Isn’t this why you (should) set up business finances entirely separate from personal ones?

    • andyg8180 says:

      not if its a DBA… corporation or LLC, you are right

    • balthisar says:

      Banks sometimes won’t lend money to LLC’s, because like people, companies have credit ratings. So if your business (under whatever structure) can’t get a loan, a business owner can take out a personal loan, and this is where you end up.

    • kobresia says:

      It’s always a good idea to keep your finances separate from your business, and intermingling them can be a recipe for disaster.

      Realistically, for a small business, the proprietor/owner will have to personally guarantee the loans if he or she is going to have a chance at getting such financing, especially if it’s an LLC.

      I think the only benefit I gain from having an LLC was against external forces suing me. It would not protect my personal assets from creditors over loans I obtained for the business if I backed them, but if, in the course of doing business, I was to be sued (e.g., if a kid climbed on an excavator or backhoe I had on a construction site, fell, and was injured, and my insurance didn’t pay for it), then only my business assets would be exposed, thus limiting the damage at least a little bit. My attorney of course noted that I had to keep my personal finances and assets readily distinguishable from my business finances and assets to limit my liability in that manner, though.

      • BBBB says:

        My attorney of course noted that I had to keep my personal finances and assets readily distinguishable from my business finances and assets to limit my liability in that manner, though.

        If there is enough money involved, the lawyers will try to break the LLC or corporation. In discovery they will search for any evidence that you paid a personal expense with company funds (or any other activity that shows the company was used for personal benefit)- if so, they might be able to “Pierce the corporate veil” which means the separation of company and personal assets no longer exists.

        • Robert Nagel says:

          That’s a very big “might”.

        • kobresia says:

          Precisely. The LLC is a way to keep from being sued into oblivion, to distinguish “company” from “personal”. When it comes time to identify the business’ assets to settle a judgement, if there’s not that veil between them and personal finances, then all the assets are fair game.

  6. andyg8180 says:

    power of attorneyship would have totally avoided this…or being a beneficiary is also an option…

    Never, under any circumstances, become a “joint” owner of an account you do not technically own…becoming joint means that that is your money, and if you default on an account, that bank can pulll money from it to even out…

    IF you decide you want to be joint for other reasons, put it in another bank… banks cant “bank to bank” settle out accounts without a court order…

    • Beeker26 says:

      This is why I never have more than one account with the same bank/lender, including credit cards. You just never know when something might happen, and the last thing you want is to wake up and discover the bank emptied your other accounts.

      • chgoeditor says:

        Alas, when you file for bankruptcy, you’re giving the government & creditors power to seize/liquidate your assets regardless of what financial institution holds them.

        • MrEvil says:

          Depending on what chapter you file under. Chapter 13 bankruptcy doesn’t work that way. You’re not forced to sell off anything in chapter 13 bankruptcy. Also if I’m not mistaken if you’re in a state that has homestead exemption your Homestead can’t be touched even during bankruptcy proceedings, assuming its paid off and taxes are current.

          • sirwired says:

            He’s not saying there are no protected assets in BK, just that the bank you stash them in doesn’t matter in how the BK turns out. And if the account is joint, it has to be a listed asset, and then is disposed of (or protected) by the trustee according to the law.

  7. full.tang.halo says:

    Get the local news involved. I’m pretty sure BofA won’t be thrilled being villified as a company that puts 87 year old SS retirees on the street.

    There also might be something to the fact she’s earned no income other than SS. I’m not sure but I think there is something that prevents debts being collected from someones SS payments.

    • Beeker26 says:

      I believe the protection on Social Security funds only applies to court-issued judgments. But again, an attorney would know for sure.

      If it is indeed protected against any kind of seizure you’d only be able to recover any funds that were actual Social Security monies and it sounds like the majority of that money was from another source. I can’t imagine anyone having $27.5K saved up from Social Security.

      • catastrophegirl chooses not to fly says:

        if the mom was getting say, $1100 a month in social security, which is a pretty average amount that i hear from the population my job works with, that’s about 24 months worth of payments to reach $27k. she has potentially been receiving social security payments for 22 years. If she saved one month’s worth a year that would almost bring her to that $27k. depending on her savings interest, that could top it off. doesn’t seem unreasonable to me

    • RvLeshrac says:

      I’m pretty sure BoA won’t give a rat’s ass. Just look at how “quickly” they jumped on the problem of throwing people out of the homes they weren’t late on.

      • Loias supports harsher punishments against corporations says:

        Actually, if you look at the ones that got media involvement, they were corrected rather promptly.

    • Griking says:

      What you’re ignoring is that they’re completely justified in taking the money. He owed money. The money was in his name. They took it. The sad thing is that they tried to game the system and put her assets in his name in case she ever became disabled the state couldn’t confiscate it to pay for her expenses (yes, this is trying to game the system). Well it backfired on them.

    • MysticYoYo says:

      Bank of America does not care. Bank of America is evil.

  8. DoctorK says:

    The strategy of putting junior’s name on mom’s account as joint owner can lead to lots of other problems. Suppose junior takes out a school bus on the way to work – those assets are at risk of being lost in a judgement since they are legally his as joint owner.

    Power of Attorney should give junior rights on the account (which expire at mom’s death) without taking posession of the assets.

    • LastError says:

      It goes both ways too. If the parent on the parent-son account happens to go senile and start writing bad checks, the son is liable to have his credit ruined and everything else from debt collection calls to arrest warrants.

  9. Nigerian prince looking for business partner says:

    What an awful story — I can’t imagine how horrible it would be to go through something like this.

    It’s also probably a good warning to seek out the advice of a lawyer when preparing for the worse like this. I suspect setting up a power of attorney would have been a better option than a joint account.

    Many years ago when I was deployed in the Army, I was very worried about minor financial problems or mistakes snowballing and turning into emergencies — this was before online bill pay, email, and when primary communication was via letters which took weeks to be delivered.. On the advice of the JAG lawyers, I gave my brother power of attorney over financial matters. He was able to write checks, contact lenders, etc. on my behalf but we did not merge our finances.

  10. Skellbasher says:

    “What would you do if this happened to you?”

    I’d consult a lawyer in the first place to make sure I didn’t do anything that would cause my mother to get screwed because of my mistakes.

    • EllenRose says:

      Which is true, but it was the elderly mother who made the mistake; the OP just allowed it to happen.

      • Skellbasher says:

        The OP should have had the forethought to make sure that putting his name on his mother’s account would never expose it to his personal of business losses.

        • EllenRose says:

          “Should” is the most dangerous word in the English language. It gives every manner of moral or economic snob the perceived right to tell us how to do things.

    • craptastico says:

      grt dvc nmbnts. t’s prtt s t cmmnt n wht hppns t thrs wth th dvc f “‘d nvr gt nt tht sttn t bgn wth”. gss t prbbl mks y fl bttr bt yrslf nd jdgng b th fct tht y hv t ct hgh nd mght n mssg brd prbbl mns yr frgl g cld s th ccsnl strk.

      • Skellbasher says:

        I’m guessing your internet rage would be equally directed toward the other 30 or so posts giving the same advice, no?

        Are you honestly saying that it’s bad advice to ensure that your business losses cannot affect your personal finances or those of your family members with which you may have entanglements?

        • mythago says:

          That’s actually great advice. Too bad that’s not what you actually said.

          The question wasn’t “Can you please tell us how you’re so brilliant that you’d never get screwed like this?” which unfortunately a lot of people seem to read into every Consumerist post; the question was, now that this has happened, what would you do? And the answer to that question is not “Hurrrr, me smart!”

          • Skellbasher says:

            I’m not trying to come off as Mr. Smart Guy. I really don’t know where you two are getting this, and I don’t really appreciate the attitude.

            I’m simply making an honest point that it would have been better if the OP knew that by signing on as a joint account holder, he could be exposing that account to his business losses because of his existing arrangements. That same point has been made countless times in these comments, yet I seem to be the only one catching any flak for it.

            Maybe my choice of words could have been better, but I’m not saying anything different than anyone else.

            • coren says:

              Because you’re telling the person what they should have done before there was a problem, not what they should do NOW. Saying “well I wouldn’t be in this situation to begin with” is super helpful, right?

        • craptastico says:

          if the only advice you can give is “you shouldn’t have gotten into that situation” than you’re not really giving advice at all. you might as well say “build a time machine and redo life”

  11. PunditGuy says:

    Lawyer up.

    I have no idea what sort of help he was thinking Consumerist posters could provide — except a kick in the face if he didn’t incorporate.

  12. ElleAnn says:

    I don’t know if it’s any comfort, but there’s a good chance that money wouldn’t have lasted a year at the retirement center. My grandmother went into assisted living in 1999 with over $100,000 in the bank, and it was all gone in about 3 years because the center cost $2000 – $3000 a month. Once her money was gone, she was eligible for Medicare to pay for her care… and she lived in the same facility for another 5 years receiving the exact same care as she did while she had money in the bank.

    • Elphaba says:

      I bet she got Medicaid not Medicare. Medicare is age based (very simplified answer) and Medicaid is asset/income based.

    • suzieq says:

      She might have been trying to go into a nice retirement facility as private pay before going on to Medicaid. IIRC, it is easier to get in as private pay, and then once you are in a facility they can’t kick you out, you just switch over to Medicaid.

      • Thorzdad says:

        That’s not necessarily true. Private-pay facilities expressly don’t take Medicaid/Medicare. I know the facilities we’ve looked at locally make it abundantly clear that if you run out of money, you will have to vacate.

  13. George4478 says:

    “This was her money and I had no access at any time”

    Unless you went to one of a gazillion BOA branches and filled out a little piece of paper to withdraw money.

    At least make a cogent argument. You had access to the money — your name was on the account. Your situation truly sucks, but you told BOA that these were your assets too.

    Enough bad press and BOA may back down, but from a legal standpoint…

  14. Anonymously says:

    Don’t resort to this level of desperation please: http://consumerist.com/2010/10/read-the-suicide-note-of-a-ponzi-schemer.html

  15. Alvis says:

    Wouldn’t 27K pay for, like eight months in a retirement home?

    • Hoss says:

      If she owns a home now – there will be funds available when sold. But I agree, $27K doesn’t sound like a lot

  16. sirwired says:

    This is sad, but Joint is Joint. There are other (safer) ways to give somebody else access to your accounts in case of incapacitation, like a Power of Attorney.

  17. jason in boston says:

    Step 1 – stop reading consumerist and consult a real professional (lawyer) for something this important.

    That’s about all I can think of. None of us here are his lawyers. I am sure he already is taking a beating at home emotionally (I know I would be), no need for us to pile on.

    • mythago says:

      Bingo. All we can do is offer advice to others who might make the same mistake, and suggest to the guy that he consult a lawyer and try to straighten things out with BofA.

  18. A42NT1 says:

    Sorry – read your loan paperwork. This is a sad case, but anyone who signed a personal guaranty for a business and has 2 brain cells to rub together wouldn’t do *any* personal banking with the same bank. Banks can (and do) seize personal assets to satisfy business debts that have been personally guaranteed.

    There may be a case to make that a joint account can’t be seized since the co-owner was not a party to the guaranty.

  19. jpdanzig says:

    I agree with the other poster who said “go to the media.” I’ll bet the OP’s local news station would love this story — and BOA would probably change their ruling here the minute the story aired…

  20. Hoss says:

    So he entered bankruptcy in May, now it’s November and $27,500 was removed from the joint account. When were the funds removed? That timing is very important.

    Also missing in the details is his dealings with BOA. What debt did they pay off? A personal loan, credit card, business line of credit??

    In the worse case scenario, he previously owed BOA and now he owes mom.

  21. Back to waiting, but I did get a cute dragon ear cuff says:

    I am not a lawyer or a banker, and never played one on TV, but I am a small business owner for 25 years so I have some experience here.

    Not to blame the OP, but…

    Knowing how BOA (and most other small business lenders) work, he personally guaranteed his business loans. That means that any account he has even partial ownership of is fair game for the bank to collect from.

    Even if you are an LLc, S-corp or C-corp, if you personally guaranteed the loans the lender can go after any and all of your personal assets to get the loans repaid. Since he was a co-owner of his mothers account, it was fair game. How did they know he wasn’t hiding assets there?

    Yes, this sucks for his mother. He may be able to get something back by using the court of public opinion, but BOA was acting completely within it’s rights by taking this money.

    • Kitten Mittens says:

      How did they know they weren’t “his” funds? That’s what his burden will be to prove if/when this becomes a lawsuit.

  22. ColoradoShark says:

    The OP says “it was saved from her social security” and there are definitely laws against seizing people’s social security. That is one angle to attack.

    As a lesson, the rest of should learn to keep our business accounts and personal accounts in different banks. If mom’s money were in BoA and the son’s business accounts were in Chase, then BoA could not have pulled this immoral (but maybe legal) shenanigans.

    • sirwired says:

      You can’t make a claim on any payments that haven’t been made yet. (As in, it is impossible to sell, garnish, or otherwise attach, the right to receive future payments.) But once that money hits the bank account, there’s nothing magic about it. If you don’t spend it, it is just like any other cash asset.

  23. jeanrabelais says:

    This guy owes his mother a bunch of money in my opinion. The bank did nothing wrong except act in it’s self interest.

    • MistahFixit says:

      Totally. I mean, it’s completely his fault the economy turned to crap, and he should’ve just told his mother to take a walk when she asked for him to sign on her account.

      /sarcasm

      Really, guy? :|

      • Derek Balling says:

        Really. He should have said “I have a crapton of debt, mom, and if those creditors ever come calling, your money could be seized to pay it back, since legally speaking, it’s also now MY money.”

        As myriad other people have pointed out, there’s much better solutions to that problem (PoA, an in-trust-for arrangement, etc.) that would have made the money untouchable to the creditor, but still had it “Available” when mom croaked.

        This is why you use attorneys. If he’d paid a first-year associate a couple hundred bucks, he’d’ve saved his mom a couple thousand.

      • quijote says:

        To be fair, from the banks perspective, there’s no way for them to know that the money in the account is hers, and that she is an elderly woman. So how can you say the bank acted wrongly? And unless the bank is willing or obligated to return the money given the situation, which I hope they are, he does owe his mom a lot of money. So what jean said makes perfect sense. You must have been too excited to nail somebody with your sarcasm to actually understand what jean said.

        • Loias supports harsher punishments against corporations says:

          They could look at bank records, which in theory would show a routine infusement of money that began before her son’s business existed. Or, that the sum of money existed in its entirety before the business began.

          They could also show proof of the source of the money. For instance, if it was from a home sale they could track the origina of the money to her account.

      • MistahFixit says:

        My point was that, to say he owes his mother money, after she asked him to sign on her account, seems just a wee bit bass-ackwards.

      • davidc says:

        Yea really.

        The money is gone because of the Son. Period. The Son owes the money to the Mother. Period.

        The son is at fault here in many ways. First off, not finding out the proper way to deal with his mothers finances … 10-20 mins of research on the net? Asking one of the managers / advisers at the bank?

        Secondly, signing a “personal” guarantee … especially without knowing all the ramifications and being mindful of that in future transactions.

        Lastly, taking the easy way out with Bankruptcy. Too many people just expect everyone else to pick up their pieces after they screw up / make bad decisions. Looks like the Son is going to have to _Man_Up_ and pay that part of his debt instead of assuming somebody else is going to pay his debt for him.

  24. vdestro says:

    If your mother is having her checks direct deposited into that account, if she has not already, have her immediately contact SS and have that stopped and get live checks instead.

  25. Kitten Mittens says:

    Depending on the state, case law on the issue and the bank’s particular disclosures, the OP’s mother can challenge this in court. Some states will view the son as being on the count as a matter of convenience and be willing to set aside the joint ownership. It’s more common in estate litigation, but that doesn’t mean it is impossible. If nothing else, it might get the bank to settle.

    A POA designation and a POD/TOD account would have been more appropriate, especially given the son’s financial issues.

  26. oreganospice says:

    Some states protect joint accounts from creditors in situations like this. OP needs to talk to an attorney in his jurisdiction. Also talk to a local elder law attorney. This situation might screw up mom’s medicaid nursing home eligability.

  27. TinaBringMeTheAx says:

    My mom did this when she was terminal so that I would have access to money to take care of funeral expenses and to pay the maintenance on her co-op until we (me and my out-of-state brother) sold it.

    Worked out fine…well, except for the dead mom part. Still miss her 18 years later.

    • Mom says:

      ^This. I’m on all of my Dad’s accounts. I also don’t have any debts, an appropriate amount of liability insurance, and enough money of my own that there’s no serious risk of his accounts being cleaned out because I did something stupid. From our experience when Mom was dying, it was much more convenient to just have someone on the account than it was to try to exercise POA. And after she died, the banks had a tendency to freeze accounts, even when they shouldn’t have. Having the check to the mortuary bounce was *not* fun. The lesson we learned was to not tell the bank, until after the bills were paid and the checks cleared.

      And yes, I still miss her too.

    • Thorzdad says:

      Both my brother and I are on our Mom’s accounts for exactly these reasons. We both also have powers of attorney. Mom has Alzheimer’s. This story really has me scared now, especially since my brother has some back-taxes issues.

    • energynotsaved says:

      My Dad put me on his account after he recovered from a stroke. He was frightened that the next time, he would need me to take over and I would need court assistance. Over time, he did need my assistance. It made it very easy to pay for his nursing home care and eventually final expenses.

      I went through a divorce near the final year of his life. My name on his account made it so easy for me to open an account at his bank. I was so glad that I had this option.

      I never considered any of these issues.

  28. sillybilly says:

    If there were only social security payments in the account, Bank of America should not have taken it to pay a debt. See http://www.bankrate.com/finance/debt/creditors-can-t-touch-your-social-security.aspx
    Your mother should contact a legal aid office and ask them to help her get her social security back. Banks constantly violate the law it this respect because they don’t do anything to track where the money comes from.
    Consider having all your social security deposited to the same account – and never deposit anything else in that account, so you can use this protection for at least that account.

  29. Reader101 says:

    Just because a name is on a shared account does not mean that each person has a legal right to the entirety of the account.

    The mother may be able to get pro bono representation through a local law school clinic or there are many organizations throughout the US who offer pro bono assistance specifically to the elderly. It may be worth a look.

  30. Sam Glover says:

    This is, unfortunately, quite common. We tried to challenge banks’ practice of levying joint accounts in Minnesota, and the Minn. Supreme Court eventually sided with the banks.

    In general, it should be possible to get the money returned in a case like this. Creditors can levy against a joint account, but the joint account holder can show up and object to the levy.

    However, here, the bank is simply seizing money from its own accounts, and may be governed only by the joint account agreement, not the law on garnishment or levy.

    Joint accounts aren’t safe anymore. Don’t use one unless you are comfortable with the credit history of all joint account holders.

  31. rcalvin202 says:

    Another reason he needs to call a lawyer, if he filed for bakruptcy and did not list the account as an assett (assuming he did get signed on as a joint owner) he could get in hot water for not disclosing assetts properly during bankruptcy proceedings.

    Also, he said it was his parnter and him that couldnt make the biz work, so it is a safe assumption it is not a sole-prop.

  32. JohnAllison says:

    Power of Attorney! Gives the power, not the risk.

    Rich and his mother had a couple of choices in how they set up that accout:
    Joint Tenants with Rights of Survivorship (JTWROS)
    -Rich can use the acount because it is his money too, technically. He doesn’t because in his mind it is his mom’s. Rich also gets the money automatically, outside of probate should something happen to dear old Mom.

    Durable Power of Attorney
    Rich gets the same powers as if his name was on the account, but doesn’t get the Money automatically on Mom’s death, it must go through probate.

    Durable Power of Attorney+Pay on Death (POD) account:
    Rich gets power to use the account if his mother is incapacitated. The bank pays rich the balance of the account upon Mom’s death, outside of probate.

    These are generalities. State laws may change the outcome. This is not legal advice.

  33. daemonaquila says:

    He may VERY well have a legal leg to stand on, depending on the corporate type, whether he did business with BOA as himself or as a corporation, etc. The one and only answer is GO TALK TO AN ATTORNEY – do not pass go, do not collect $200, do not ask for Internet advice.

    Unfortunately, many small business owners take shortcuts with their corporate status or accounts, which may legitimately hurt them in the end (which is why business attorneys get gray hair trying to protect their clients… from themselves). But no matter the doubts, someone in his position can’t just make assumptions that the bank is on the legal up and up due to an error he made. Mortgage backed securities… usurious lending… subprime mortgages… forclosure problems… why OF COURSE banks are honest – why would anyone ever question it?

  34. guymandude says:

    IANAL but wouldn’t the bank have to show that the money in the account was the exclusive property of the OP and not his mother? Otherwise how are they not guilty of conversion?

  35. HappyNowConsumerist says:

    You (your business) incurred debts – meaning you promised to pay later for resources now. Then, you did not follow through on your promise. Who should be responsible for that, you or others? The bank owes it to those others to get as much as it can from your assets before it asks others to pay up for your mistake. And, the bank account of your mother’s that you “signed on” contains assets you have access to. Why should anyone else pay before you do?

    I think the bank has the responsibility to do what they did, and the OP has right and responsibility to do everything he can to repay his mother. If the OP has any time of each day not already dedicated toward other duties, take on a 2nd (or 3rd) job / mow lawns / etc and start repayment immediately to regain the trust of his mother. That is what responsibility, ownership, and accountability is about.

    • Talmonis says:

      Man, you libertarian types really do relish in these moments don’t you? What could taste better than caviar bought with an old woman’s life savings? Man I sure do love some Laissez Faire economics…

      or

      To further translate what this poster is saying, “Ha ha ha, you didnt forsee the economic collapse my friends in the banking industry created and lost your business. You should also be ashamed for not being fluent in legalese. Making mistakes is something that only poor people do and you should be ashamed for not knowing that my friends in the banks will more than gladly take everything from your mother if something goes wrong. Oh, and don’t forget to apologize to your mother and “work to get her trust back”, because CLEARLY the only reason she had you was so that you would make her money and not lose it all in some silly “economic bust”.

  36. quail says:

    Actually, that’s the way all banks will structure their loans. Never have all of your money with a bank that’s extended you credit. It’s why most businesses that are beyond the mom & pop stage will bank with two separate entities or more.

    As to his mom, if it’s a joint account and his business was a dba/sole proprietor then he’s out of luck. He’s really got to know his state’s laws to know if he’s got grounds to get the money returned.

  37. erratapage says:

    You need a lawyer. You may be able to get some of the bank of america funds back, because social security monies are probably protected by garnishment. Good luck.

  38. joescratch says:

    What would I do? I’d hire a hit man.

  39. Abradax says:

    It sucks, but as a signer on the account legally the funds also belonged to you. That means that if the bank has to sieze your assets to cover your debts, that account is fair game.

  40. peebozi says:

    PNC bank ercently froze $100,000 of my business funds because the name was close to another on a writ of execution.

  41. peebozi says:

    An army of banker liars & lawyers will beat the little guy every time. Rich didn’t know that he should have done a PoA instead of being added to the account…but the banks army of liars, er lawyers did.

  42. edosan says:

    This sucks, but I agree with everyone else — when mom put the OP on her account, that technically became “his” asset as well and therefore fair game for creditors.

    I don’t like it, but it’s not a “technicality” either.

  43. savdavid says:

    BOA does not care. What else can you say?

  44. Extended-Warranty says:

    This is a terrible thing to happen, and I feel so bad for your mother.

    However, trying to be as respectful as possible, you need to get smarter with your finances. Of course everyone is victim to the recession, right? Your business sense had nothing to do with anything, right? Something tells me you just accepted the $27,500 idea on the spot without doing any research. Perhaps these two events are connected in some way…

    While your only option may be to talk to an attorney, there are cons which no one else seems to mention. You could fight with the banks for god knows how long until the courts decide you owe money and your name was on the account. Then not only are you bankrupt and so is your mom, but you now owe thousands (maybe tens of) in attorney fees.

  45. raylene05 says:

    Is that actually legal? I know when my mom’s finances got all screwed up and she owed a bunch of money to creditors, they couldn’t take anything that my dad’s name was on, even when it was a joint ownership (i.e. their house or cars).

  46. joshwillis says:

    Hopefully this drives home the fact that you REALLY need to have your financial ducks in a row when you setup and run a business.

  47. wrongfrequently says:

    My in-laws begged to have our name on their accounts for the same reason. I explained that a power of attorney was the proper and best way to go b/c in my previous stint as a tax cpa admin I saw first hand how mucked up finances can get if you just add names to accounts.
    My In-laws pooh-poohed my idea and and now my 53 year-old, no-job, live -with her parents- sister-in-law is on all of their accounts, her creditors will be so happy when they discover that.
    Seriously DO NOT get mixed up with other people’s assets unless you are married to them.

  48. human_shield says:

    They should have added him as a power of attorney, not an account holder, but I see that’s already been said to death!

  49. Roxie says:

    What a horrible situation. :( Unfortunately, I’m really not sure there is much that can be done at this point to help the OP because the bank was playing by the rules. The problem lies in the OP’s status with his mom’s account–what his relationship is to his mother (ie joint account holder, authorized signer, etc). If he was a joint owner on the account, according to BoA’s system, with no restrictions at all on what he was allowed to do, then yes–the bank will take money out of that account to help cover the debt in another because it looks to them like he owns the account…which he does, if he really is a joint owner. If he was just, say…an authorized signer, or a custodian, or a benefactor…then the bank wouldn’t be able to use that account to help cover the debt of the other one. With this kind of situation (one account in the red, one related account in the green), what the bank cares about is whether there is money in the “green” account at all, not where that money has come from. It doesn’t particularly matter to the bank that the funds going into that other account was from Social Security (or that the original owner of the account was an 87-year-old woman who really could’ve used that cash instead). What matters is that it’s money to transfer into the “red” account to help pay off the debt.

    Overall: I think the OP’s best shot at getting the money back would be if he didn’t have the proper…authority, let’s say, or relationship?…to his mom, and BoA took the funds anyway. Like–if he was a custodian or benefactor or authorized signer, as three examples, on his mom’s account, and the bank still took out the funds, then BoA would be in some very major trouble, then.

  50. Thyme for an edit button says:

    Sounds like your mom needs a lawyer. See if there is some kind of legal aid in the area, particularly one that helps seniors.

  51. coffeeculture says:

    revocable living trust ftw, this is exactly why you’d choose this vehicle vs. just adding the name to the account.

    sad story and very unfortunate, but with a business in play and someone’s retirement assets, an accountant or other professional should have been consulted.

  52. zibby says:

    This sucks, and it’s why I would never allow my mother to do something like this. Better to look into a POA with a springer if the parent is worried about having someone look after his/her affairs…

  53. Jimmy37 says:

    Time and time again, financial articles write that you should never, ever put someone else’s name on your assets. That’s what power-of-attorney documents are for.

    Just because you posted that the money is your mother’s, why should anyone believe you? How can you prove that? Your name is on the account. This is not a technicality.

  54. elephantattack says:

    Incorporation fail?

    I’m not usually one to take the side of the big bad wolf but this guy doesn’t seem to understand that if you have a company it has to be incorporated in some way to keep this very thing from happening. In short, this guy probably not have been opening a business to begin with.

  55. cf27 says:

    So… Right on that getting Junior to co-sign was a bad idea.

    One possible option: if the account had Mom’s social security payments, then the bank could be in serious trouble for taking them.

  56. Wolfie XIII says:

    The real lesson? NEVER MIX PERSONAL BANKING AND BUSINESS BANKING WITH THE SAME BANK! The Bank can (and will) choose to dip into any account with your name on it controls at any time to pay itself whatever it thinks it is owed. Keep your savings, personal, and business account in different banks if you want any sort of protection of your assets from another part of your financial life. It’s not an end all solution (if you want an end all, bury your money in a box!) as they can still sue you and get court orders to access your money, but at least they can’t do it overnight without telling you.

  57. segfault, registered cat offender says:

    You can make an account payable-on-death or even give them signatory authority without titling the account in their name. Unfortunately, bank personnel are not always well versed on the differences between each of these options, just as they often don’t understand the way the FDIC insurance limits work.

  58. JonBoy470 says:

    Sucks that his mother’s savings were depleted. That’s just crap, but legal I think. A durable power of attorney would have helped quite a bit I think.

    Anyhow, sounds like the OP’s mother is going into assisted living/long term nursing care soon. Depending on what her care needs are, and where she lives, her $27K would have paid for that for 6 or 8 months at most. Which means an asset spend-down and Medicaid enrollment was in her future. Basically, the OP would have spent all his mother’s money funding her care, until she was indigent and qualified for Medicaid. The OP can still do the same, the process will simply be accelerated due to BofA’s actions. This is, sadly, the fate of many old folks who have little in the way of assets (or poor estate planning). Most nursing homes and assisted living facilities have social workers on staff to help coordinate this process, as it occurs so frequently.

  59. MedicallyNeedy says:

    If he had no idea, who talked his mother into doing this? Was she aware of her son’s financial situation? Was it after his bankruptcy declaration? If so, B of A should be sued. Theft by deception! Somebody there must have talked her into adding his name.

  60. Robert Nagel says:

    Another point.
    Suppose you get put on the account with your millionaire father-in-law’s multi-million dollar stock account. Further suppose that you up and die. Guess what! Your heirs are now looking down the barrel of a multi-million dollar estate fee to the government. The IRS considers any assets which you CAN control as being in your estate. The fact that it wasn’t your money and you had no legal right to use them matters not. They will be included in your estate for tax purposes. Yet another reason to permanently do away with the estate tax. By the way, don’t die for at least a year after your name is removed. Take care now.

  61. sopmodm14 says:

    f*ck BOA for this

  62. ReverendAIDGnarl says:

    Pretty sure an LLC would’ve solved this problem. This is truly very, very sad but I can’t actually fault BoA, despite despising me with every last fiber of my being. Sadly, despite your claim of never having access to her money, paperwork showed differently. I think about the only thing you could do at this point would be to attempt to stir up some bad press. Even then, you’ll likely end up with nothing but certainly no harm in giving it a try.

  63. madashell says:

    take them to court

  64. The Marionette says:

    “It’s doubtful BofA crossed any legal lines here”

    Well there you go……….

    @madashell

    For what? Collecting on debt he owes?

  65. Kitten Mittens says:

    Plus, where in the OP does it say he was from Florida?

  66. pyrobryan says:

    I’m an idiot and I know two things (or at least I think I understand them correctly) would have helped this guy:

    An LLC legally separates the man from the company.
    Power of attorney gives one person the power to act on behalf of another.

    So, had the man set up his company as an LLC, the bank could not (as far as I know) sieze money that did not belong to the company to pay the company’s debts. If his mother had set him up with power of attorney, he would have had access to her accounts in the event that she became incapacitated, but he would not have “owned” that money and the bank couldn’t have touched it.

    Hate to say it, but it looks like he learned his lesson the hard way and his mother is suffering the ill effects of his bad decisions. Going to the media and trying to bully the bank in to giving the money back might work, and in this case, giving the money back may be the right thing to do, but the bank is only doing what it has to do. They can’t just give everyone’s money back because they have a sob story. A bank is a business and you agreed to pay back the money you borrowed. They have the right to take your money if you default on your loan. That’s why I got my home mortgage through a different bank. At least if I default I can take what few dollars I have left and rent a moving truck to get my stuff before they lock me out.

  67. VouxCroux says:

    I don’t even think it’s Bank of America’s fault. Ever hear of a POWER OF ATTORNEY???