Mother-in-law money troubles.

March 10, 2009 12:28 PM

Are we risking our financial status (credit rating) by having our name on our irresponsible mother-in-law's bank account?

So the MIL is a sweet person but never has (and never will have) any discipline with respect to money. She is on a fixed income that is enough to pay the bills with some left over (maybe $100-200 a month). However she is frequently behind due to a couple of reasons. One, she just doesn't think ahead and two she often gives money to her ne'er-do-well, 45-year-old, son. We've told both the MIL and her son that she cannot afford to give him money and have gotten the joint account with her in order to increase the visibility of that behavior.

Unfortunately she chafes (to put it mildly) at our attempts to limit her giving money to her son -- or telling her that she has to be more careful with her money. This has gotten to the point where she is *very* resentful and blames us for not supporting her and her son.

So, we're at the point where we are considering letting her sink or swim. The question is, if she sinks, will we be harmed by having our name on her bank account? Our only use of the account is for visibility, as mentioned, and to deposit money when needed.

Also, is it even conceivable that we might assume legal control of her money? While she is clearly not processing as well as 20 years ago (she's 70), other than financially I don't see her as a danger to herself or others and I assume it would be difficult to have her declared incompetent based on money alone.

posted by luge to human relations (8 comments total)

It depends on the laws of the state where you are, but in most cases, if you have joint ownership of the account, then you would be taking a credit hit if that account gets sent to collections, and likely be named as a defendant if MIL gets terribly overdrawn and the bank sues her.

My advice is as follows: She's a grown woman who can make her own decisions. Sometimes, the ones we love make self-destructive choices that we can see as bad from a mile away, but they can't. MIL seems to need to learn this the hard way. Plus, if she's old and passes away, the debts go with her to the grave.
posted by reenum at 12:41 PM on March 10

The danger is that she might overdraw the account. That'll hurt you (could affect your credit rating as well as your Chexsystems records, thus preventing you from being able to open new checking accounts). If she manages to get a negative balance it could be your liability to pay it.

If you want to go ahead with this idea, it might be safer to ask her to have the account in her name but get login info for online banking so you can see the transaction activity.
posted by phoenixy at 12:41 PM on March 10 [1 favorite]

I totally agree with phoenixy. I'm in a similar situation myself. I'd suggest that you close that account as quickly as possible, and then have her establish an account at the same location where you do your banking to lessen the oversight burden on yourself. Hold her hand throughout, and get the info you need to play "big brother" on her finances.

Especially in these days and times, its not a good idea to open yourself up to unnecessary financial risk. A solid credit rating is very important now.
posted by Dave. at 12:52 PM on March 10

Plus, if she's old and passes away, the debts go with her to the grave.

This is not necessarily true.
posted by rhapsodie at 12:57 PM on March 10

We've told both the MIL and her son that she cannot afford to give him money and have gotten the joint account with her in order to increase the visibility of that behavior.

Frankly, this is what happens when you try to control others irresponsible behavior. She is responsible for the behavior and you have to learn to let her sink or swim. I'd get my name off that bank account in a split-second.
posted by Ironmouth at 1:56 PM on March 10

Get your name off the account and get a power of attorney instead.
posted by phearlez at 2:08 PM on March 10

Phearlez has the right idea.

My BF (an attorney) says:
1) her bad financial management can absolutely bork your credit rating if she overdraws the account and she / you doesn't / don't immediately fund the overage;

2) having duplicate statements mailed to you (bank will do this) without being on the account gives you the info you want without any exposure;

3) POA doesn't give you power unless she consents to your activities or it's a durable POA and she's gorked out. It DOES let you ask bank for data but see 2) above;

4) IF her mismanagement and her largess to her ne'er do well issue is caused by senile onset dementia or other age related mental decline she might need a conservator or guardian of the estate (various states have different names for it). You might call your state's Bar Association and ask for a referral to a lawyer who practices Elder Law - that's what it's called in most states. Usually the consult is cheap or free and you'll then know much more about your options and ability to help without having your credit rating black holed by her inattentiveness.

Good luck.
posted by bloggerwench at 9:56 PM on March 10

This is all great advice. Thanks!!
posted by luge at 8:13 AM on March 11