Q: I am acting as power of attorney for my mother, who is 94. I am in the process of opening a new checking account for her, and I wonder if I should be on the signature card as a cosigner, in case funds are needed immediately in the event of her death. It's no problem if she's alive, but I wonder what would happen upon her death -- would the checking account be frozen as part of her estate?
A: You raise an important issue if you are going to need to access funds from your mother's checking account immediately to pay for burial expenses. If that's the case, then simply having signing authorization on the account may not be the right solution.
Please note that laws vary from state to state, so to really nail this down you may want to consult with a local attorney. However, the following should provide you with a general overview of how these things go.
Currently, as a power of attorney, you should be able to sign for your mother during the remainder of her lifetime. You would simply present a valid power of attorney document to the bank, and have them add you as a signatory in that capacity. However, since this is your mother's checking account, it would be subject to probate laws and procedures upon her death.
Essentially, once the person's life ends, the power of attorney's authority ends and the executor's authority takes over. In order to use the authority as executor to administer the will, then you (or whoever is executor) would need to get a testamentary letter from a local court.
A testamentary letter usually involves a preliminary review of the last will and testament to confirm the identity of the executor. Obtaining one should be a fairly routine and quick procedure. However, if your concern is that there might be some immediate expenses associated with her funeral arrangements that won't be able to wait for this process, another alternative is to set up a burial trust. This sets money aside in a special trust specifically to cover funeral expenses.
A funeral home should be able to walk you and your mother through the process of setting this up, in conjunction with the bank of your choice (this would entail pulling some money out of your mother's checking account and putting it in a dedicated account for the burial trust).
Setting up a burial trust is also an appropriate occasion to make sure you have fully discussed with your mother what kind of funeral arrangements she wants. It's not a pleasant task, but it will help make sure her final wishes are kept.
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