A spouse needs access to a financial account, e.g. IRA, owned by her/his spouse who has just become incapacitated.
An adult child needs access to a financial account, e.g. checking account, owned by her/his widowed parent/mother/father.
e.g to pay for caregiving expenses plus e.g. mortgage / rent / cost of outside health care aides and / or Nursing Homes etc.
"Ideal" "Best Practices" Scenario
As a Financial Advisor, I get a live phone call (not email or voice mail) from Mrs. Adams. "Bruce, Mr. Adams just had a stroke. We think he will be fine. In the meantime, I need to make a withdrawal from his IRA account. Could you please send me $12,000?
I reply, "Sure." I go online and click the appropriate spots. If this happened on a Monday through Thursday in the morning, it's quite possible the money ended up in the previously designated account the next day. On a Friday, money would probably show up in the account the following Monday.
Understanding the steps needed for the Ideal Scenario ... aka avoiding the "Nightmare" Scenario."
Positive and cooperative relationships exist between and among the clients' professionals including:
- CPA / EA-Enrolled Agent / Tax Preparer
- Financial Advisor
Durable POAs - Powers of Attorney - are completed
The clients have met with their attorney who has prepared Durable POAs - Powers of Attorney - enabling each spouse to take financial actions for each other if one or the other is incapacitated.
The documents are
in accordance with the laws in their jurisdiction.
Copies of both POAs are retained by / given to
- Each Financial Institution
Completed Durable Powers of Attorney copies provided to Financial Advisor / Financial Institution
Financial Advisor also has client complete and sign additional document(s) required by their Financial Institution.
Financial Advisor makes sure that the clients' own POAs as well as the Financial Institution's required documents are properly filed.
ACH - for Convenience and Safety
- Financial Advisor gathers void check and bank info from clients
- Clients approve ACH documentation
- Financial Advisor properly attaches ACH info to account(s) client(s) designate
- Money can now flow electronically between the designated accounts
Without the delay or potential security challenges of paper checks
Why is all this necessary: Titling is important
Access to money is only provided to an owner - absent other instructions / legal documents
- Access to money absent this documentation and process is restricted only to an owner.
- An IRA to the best of my knowledge is never joint.
- Many spouses, especially in long / first marriages with children / grandchildren together, think of all assets as "theirs" as opposed to owned by one or the other.
- But Financial Institutions are bound by legal and regulatory requirements, thus requiring this sort of process when an account is owned by one person.