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A Joint Owned Bank Account Is not Yours Alone

Many people add friends or family members to their bank accounts for convenience or to avoid probate.  But, when circumstances change, and the original account holders want to regain sole ownership of their accounts, they are shocked to learn they cannot.Many people add friends or family members to their bank accounts for convenience or to avoid probate.  But, when circumstances change, and the original account holders want to regain sole ownership of their accounts, they are shocked to learn they cannot.

To close an account, banks almost always require the consent and presence of all joint owners.  Problems arise if the new account holder refuses to cooperate or the original owner wishes to act without consent.  The original owner is no longer in complete control of the money and cannot close the account alone.  However, the original account holder can transfer the funds to a new account.  The original owner will first need to open a new account in his or her name alone then transfer the funds from the old account into the new.

Account holders may accomplish transfers by check or a cash withdrawal.  Minimum balance requirements may make complete withdrawals impossible.  However, such requirements are typically small, and the original owner can withdraw everything from the old account, leaving $1, $10, or $100, while transferring the remaining money back into his or her own control.

Helpful Phone Numbers

When an older parent has sold a home or is preparing to move, who do you call to change services in the DC metropolitan area?

Electricity: PEPCO 202-833-7550 or BGE 800-685-0123
Gas: Washington Gas 800-752-7520
Water: WSSC 301-206-4001
Verizon: 301-954-6260
Comcast: 301-424-4400 (Montgomery County) or 301-499-1980 (Prince George’s)
Washington Post: 202-334-6100

When you are making these calls, have a recent bill from the appropriate service in front of you. Even better, have the person named on the bill at your side, or the company may refuse to assist you for “privacy reasons.”

Make these phone calls a few weeks in advance of any move. The water company, for example, will want to read the meter. Other companies may need a few days or weeks to complete the service change. Timely calls help avoid bills for services provided after the move.

Maximizing Your Social Security Payout

You can start drawing Social Security benefits any time between the ages of 62 and 70. The longer you wait to start, the greater your monthly benefit. If you start at age 62, you get about 75% of your retirement benefits; and if you wait until age 66, you get 100%. But if defer for the maximum period, until age 70, you get 132%. Given the chance to collect more benefits later in life, people frequently ask, “When should I start collecting?”

In a recent Washington Post article, Alan Sloan explains that if you wait until age 70, you must live well over a decade to make up the difference having failed to receive benefits earlier. The author provides good support for his thesis that retirees should start drawing as soon as they can collect 100% of their allotted benefits. It takes 12.5 year of a 132% benefit to make up for the four years missed at 100%. In other words, retirees who delay benefits until age 70 and don’t live another 12.5 years will have gambled and lost.

Why you shouldn’t be concerned about the Federal Estate Tax

The federal estate tax is also sometimes known as the “death tax”. This is a federal tax imposed upon estates in which the assets total greater than $5.43 million for individuals who are single at the time of their death. No death taxes are imposed on estates where a person leaves all assets to a surviving spouse.

Surprisingly, the federal death tax affects very few people. In 2013 over 2.5 million people died and only approximately 4,600 of them had taxable estates. That’s less than .2% of the people who died.

I hope for each of my clients that at the time of their death that they are in the lucky 200th of a percent (.2%) of the population who dies with a federally taxable estate.

What happens if you die before you sign your will. Who gets what?

People frequently wonder what will happen if they die intestate – that is, without a will.  Don’t worry, the state has written a will for you, but it just may not be the one you want.  The following is a summary of that state-authored will:

• If you are married and have children under the age of 18, your estate is split between your spouse and your kids.  Your kids receive their shares when they reach their 18th birthdays, and nobody supervises how they spend the money.

• If you are married and have kids who are 18 years or older, your assets are divided between your spouse and children.

• If you are married and don’t have kids, your assets are divided between your spouse and your parents (if they are still living).  If your parents have died, your estate goes to your spouse.

• If you are single but have children, your assets are given to your children.

• If you are single and childless, your assets are divided among your siblings and parents, depending on who is alive.