What to do with mother-in-law's hoard of cash
April 11, 2013 2:15 PM   Subscribe

We have a large quantity of cash that my mother in law has stashed in an old purse over the years. Now she wants us to deposit it in the bank for her, but we don't want to run afoul of cash reporting requirements, prohibitions on structured transactions, or civil forfeiture.

My elderly mother-in-law recently had a seizure and was in the ICU for a couple of weeks, and is now in a nursing home for rehab for a few more weeks. The day she went into the hospital, some of her jewellery went missing. While we were visiting to take care of my father-in-law, we helped clean out the house and collect and inventory her jewellery to prevent further theft. In the process, we found an old purse stuffed with cash, (somewhere between $16,000 and $20,000). She has been saving it for years without telling my father-in-law, who controls their finances. We have it safely in a safe deposit box now. After her mom regained consciousness and was coherent, my wife told her what we had done. Mother-in-law asked us to put it in the bank for her.
We can't open a new account for her because she is in a different city and we don't have her social security card. We don't want to hand it over to father-in-law because it is her money that she has saved over the years, and we want to keep her confidence. We're nervous about putting it into our account because it's not our money and if we deposit $20,000, the bank will have to report the transaction (and if we break it into smaller transactions, they may report us anyway). Finally, we've read enough civil forfeiture horror stories that we don't want to have the authorities seize the cash and then expect us to prove that it isn't the proceeds of illegal activity in order to get it back. Frankly, this much cash just kind of freaks us out and we don't know what to do with it.
posted by anonymous to Work & Money (30 answers total) 4 users marked this as a favorite
Please keep in mind that a lot of jurisdictions have very specific rules as to what "hard cash in a safe deposit box" means, and what protections you have, and what responsibilities the bank has. It's not necessarily as safe as you may think.
posted by griphus at 2:19 PM on April 11, 2013 [3 favorites]

The cash all had old dates on the notes that follows a pattern consistent with someone slowly hoarding cash over years right? I have no idea how this sort of thing works on banks' ends but if you even end up needing to defend the cash that might be something worth bringing up as it would be hard to fake and pretty inconsistent with anything super illegal.
posted by Blasdelb at 2:20 PM on April 11, 2013 [2 favorites]

As someone with no real expertise but who has dealt with some estate/power of attorney/planning/safe deposit stuff lately. I'd suggest making your MiL the joint account holder on the safe deposit box for now (you can do this with paperwork, she does not have to go to the bank in person, she will have to sign something and possibly get it notarized, she does not have to tell her husband even what is in the box) and then the contents are jointly hers for now. At a point at which she is feeling better, you could help her open hew own account, even online. Whether or not the money will ultimately belong to her or her and her husband sort of depends on the laws of the state she's in and a bunch of other things.
posted by jessamyn at 2:23 PM on April 11, 2013 [1 favorite]

FWIW this is barely above the minimum ($10k) that triggers the reporting requirements. If you split it between two bank accounts, nobody will need to report anything.
posted by mr vino at 2:30 PM on April 11, 2013 [7 favorites]

Yeah, this isn't a huge deal. Split it or don't, it's kind of up to you.

My great aunt and uncle were hoarders, they found something like 200k in their house stuffed in suitcases, old purses, boxes, etc. when my uncle died.

After some due diligence on the part of the bank my aunt was able to split it into a few savings accounts no problem.
posted by Oktober at 2:34 PM on April 11, 2013

Incidentally if you sorted the bills into bundles by year, five years, or decade depending on the sample size we're talking about then their distribution would be immediately apparent, don't know if that would set off different sketch alarms though.
posted by Blasdelb at 2:36 PM on April 11, 2013

I would not be concerned about the $10,000 reporting requirement. So what if it is reported? Is someone going to accuse her of some illegality?
posted by yclipse at 2:43 PM on April 11, 2013 [13 favorites]

I'm pretty sure drug dealers don't require new bills, so hoarding cash wouldn't look very different from other illegal activities.

But I imagine the banks are familiar with this sort of behavior from folks old enough to have lived through the Great Depression. My main concern would be keeping the money secret from the father in law, and I would keep it in the deposit box for that reason alone.
posted by politikitty at 2:48 PM on April 11, 2013 [2 favorites]

I'm going to guess this happens pretty often, and the bank won't be surprised, and they will totally believe your story about an old person hoarding cash, and they will report it is you deposit all $20,000 at once (as they must) but they won't raise any flags.

But if you put it in an account in her name, it may be impossible to hide it from her husband.

Um, so, exactly what politikitty said.
posted by mskyle at 2:48 PM on April 11, 2013 [1 favorite]

Trying to split things to avoid the reporting requirement can be way more suspicious than just hitting the reporting requirement.
posted by grouse at 2:49 PM on April 11, 2013 [7 favorites]

We don't want to hand it over to father-in-law because it is her money that she has saved over the years, and we want to keep her confidence.

IAAL, IANYL, TINLA. I represent a very large bank.

This will depend on your state's law, but if it is money she has acquired during the course of her marriage, it is very likely to be property of the marriage rather than "her money". Putting the money in an account with just her name does not make it "her money".

Currency transaction reports (CTR) are required for transactions of $10k or more. Suspicious activity reports (SAR) can be filed for transactions of $5k or more where the bank "knows, suspects, or has reason to suspect" the funds are illegally gained or are being deposited to violate federal law or skirt reporting requirements.

If you are determined to deposit it, just split it between two banks. Please don't think that depositing it in the bank protects it from her husband, though.
posted by Tanizaki at 2:51 PM on April 11, 2013 [4 favorites]

FWIW this is barely above the minimum ($10k) that triggers the reporting requirements. If you split it between two bank accounts, nobody will need to report anything.

OTOH, being over the reporting requirement isn't against the law, but acting to avoid it is.
posted by smackfu at 2:53 PM on April 11, 2013 [6 favorites]

Yeah I'd wager an account that has a lot of large transactions is going to be a lot more suspicious then one large deposit just kind of sitting there gaining slowly, I mean 20k is a lot, but not a LOT a lot. So if you do go the account route eventually I really would not worry too much about the 'reporting' angle of things. The thing to navigate is the keeping it secret angle. Which in the long run is going to be difficult in a bank account. And certainly would be a shock to the husband if she passes away first, 'oh here is tens of thousands of dollars your wife was hiding from you'. And (without moral judgement) yeah, technically it is likely it still both their money.
posted by edgeways at 2:58 PM on April 11, 2013

I'd leave it in the safe deposit box, at least for now. I don't see a seizure or forfeiture problem with that, since you, your wife and MIL are the only three people on the planet who know exactly WHAT is in that box: all the bank knows is, they rented you a box, and you put *something* in it.

The problem with opening an account (or two) in her name is, what if, god forbid, the worst happens and she dies? Unless she has a will specifying otherwise, her heir is her husband, and that's exactly what she does NOT want to happen. But when you do go to open an account, perhaps make it TWO 'joint' accounts: split the money in half, and have one account joint between MIL and your wife, and the other joint between MIL and you, plus written agreements that if MIL dies, the money goes entirely to you and your wife --- specifically NOT her husband.

Oh, and I don't think you'd need her actual, physical social security card to open any accounts: just her social security number. Check with your bank to make sure, and to see if you even need her signature.
posted by easily confused at 3:05 PM on April 11, 2013 [1 favorite]

I would try not to create any moral judgements on their marriage. If she was not in charge of the finances, it's simply prudent for her to keep cash available as a safety net. Yes, she could use it to get out of the marriage. But she could also use it if he goes to the hospital and she has no access to the rest of the accounts. Of if he suddenly develops a gambling habit, and she needs to pick up the peices.

Keep her confidence, but understand that this might simply be about her relationship with money, and not her relationship with her husband.
posted by politikitty at 3:23 PM on April 11, 2013 [2 favorites]

Why don't you have her file a gift tax return a declare a "gift" of the money from her to yourself and your wife - between the two of you, you can report up $13k each, so $26k total. Then you can report the money legally, keep it in your accounts, and then give it to her if she needs it.
posted by unexpected at 4:04 PM on April 11, 2013 [2 favorites]

Please leave the money in the box unless/until you have a very clear picture of her financial situation.

For instance, if she is on social security and her social security number (required to open the account) is suddenly associated with a large amount of cash, her benefit amount could be affected.

If it goes into an interest-bearing account the bank will 1099 her, complete with a form sent to her house, which FIL could easily come across.

I wouldn't even put her name on the box, again because of the social security number issue, but if your wife's family is such that formalities are important, I would talk to a lawyer and draw up some sort of document that says "we took out the box but the contents of the box are yours. All you have to do is verbally request the contents and they will be turned over to you". I doubt in this case anyone would want a written inventory of the box, but if so, so be it.
posted by vignettist at 4:22 PM on April 11, 2013 [1 favorite]

From the OP:
Thank you for all the quick replies. Politikitty is right--this isn't about the relationship between the two of them--it's more about her having something that she alone is in charge of. We're not worried about father-in-law trying to track down and take the money (or getting it as part of her estate). It was just her little secret, and as long as she's alive, we'd like to let her keep it. I didn't at all mean to imply anything sinister on his part.

Unexpected's idea of reporting it as a gift could work, except that as part of estate planning, they've already made gifts to us this year. The money isn't ours and we don't want to take it--we're holding it for safekeeping and want to get it back to her as soon as possible. That's another reason a CTR might be problematic. Not knowing how closely a $20k transaction might be scrutinized, we don't want to set ourselves up for tax scrutiny as well.

We'd really just like to give it back to her and not have to deal with it, but that's not really an option for us right now. Maybe we'll just leave the cash sitting where it is for now, but that big stack of bills just makes me uneasy.
posted by mathowie (staff) at 4:30 PM on April 11, 2013

Your MIL has been saving these bills for years , in her purse. And, they never got stolen, never disappeared.

Now you have it and the paranoia is causing you to overthink. There is no reason to be freaking out - surely you can handle this money just as competently as your aged MIL.

The safe deposit box is safe. People put considerably more in jewelry than $20k. Much more. If you don't trust the safe deposit box at the bank, buy a safe that is installed into the structure of your house, and keep it there. Many wealthy people, retail owners, etc. keep money at home, similar to your MIL. And, much more money. But, it will be less safe than the box at the bank.
posted by Kruger5 at 4:48 PM on April 11, 2013 [1 favorite]

1- Don't try to fool the system. It just makes you look guilty. And as smackfu says, it could make something that's perfectly legal into a crime.

2- If the MIL really wants the money in the bank, perhaps a good compromise would be to put half in a savings account, and leave the other half in cash. This hedges her bets- she still has ready cash around in case she wants to use it, but she also has the protection of the bank in case the cash gets stolen or burnt in a fire or whatever.
posted by gjc at 5:31 PM on April 11, 2013

>Why don't you have her file a gift tax return a declare a "gift" of the money from her to yourself and your wife - between the two of you, you can report up $13k each, so $26k total.

The amount is $14,000 this year, and the point of the $14,000 exemption is that you do not have to file a gift tax return if you choose to give up to this amount per year.
posted by yclipse at 5:46 PM on April 11, 2013

politikitty: "I'm pretty sure drug dealers don't require new bills, so hoarding cash wouldn't look very different from other illegal activities. "

Drug dealers (or anyone else conducting business in cash for that matter; not all cash business is illegal) are going to have, for the most part, new cash. Very few bills will be over 10 years old and half their bills will be less than 3 years old (the average life of a 20 for example is 25 months, a dollar bill only 18 months). The MIL's cash on the other hand, if she hasn't been churning it somehow, is going to be wildly old in comparison with a much lower percentage of less than three year old bills. IE: if she'd been saving the same amount annually for 10 years less than 20% of her bills will be younger than 24 months. The percentage goes down for every additional year.
posted by Mitheral at 6:39 PM on April 11, 2013 [4 favorites]

I doubt the condition of the bills is going to be a factor in anything. Its not like the bank keeps records of the serial numbers of the cash you deposit. You hand them $10k, they fill out a form.
posted by gjc at 7:19 PM on April 11, 2013

True, but if the OP is found in possession of 20K in cash it won't look like drug money.
posted by Mitheral at 7:50 PM on April 11, 2013

I mean, I don't know if this idea is stupid or illegal, but is there a reason that you can't just deposit an unremarkable sum into a bank account every week? So that they don't think it's weird that you just have $20 grand out of the blue?
posted by windykites at 10:05 PM on April 11, 2013 [1 favorite]

Something similar happened when my grandfather passed away several years ago. My grandparents had stacks of cash that was hidden in walls, old trunks, etc. My grandmother was in no state at the time to handle such cash, so my parents just took it to the bank. The bank reported it, but it seemed like the "senior hoarding money" was a common event and didn't raise any suspicions, at least on the bank's side. When they asked where the money came from, my father's reply was "My parents lived through the Great Depression, didn't trust banks", and that was accepted. Neither I nor my mother can remember there being any tax or Social Security implications, and this was a substantial (to us, at least) amount of money.
posted by roquetuen at 11:28 PM on April 11, 2013

I'm a high stakes poker player and I make cash deposits of more than 10k on a regular basis. I'm quite sure that my bank files the appropriate CTR, but that has never caused me a single problem. Some government agency presumably has a file on me, but I pay my taxes faithfully and have not been accused of any illicit activity. I seriously doubt that anyone is going to decide your one time 20k deposit is evidence of illegal activity in any way. Open a bank account, add your mother-in-law to it and deposit the cash. Nothing bad will happen. You are at massively higher risk of getting seized if the cops randomly find a huge stash of cash than by depositing it in a bank.
posted by Lame_username at 6:21 AM on April 12, 2013

I mean, I don't know if this idea is stupid or illegal, but is there a reason that you can't just deposit an unremarkable sum into a bank account every week? So that they don't think it's weird that you just have $20 grand out of the blue?

As gjc and smackfu indicate above, depositing small amounts to try to avoid a currency transaction report is a structured transaction (aka smurfing) and is a federal crime punishable by a fine and up to 5 years in prison. There's nothing illegal about OP depositing $20K in one lump sum, but it is illegal to break it up into smaller deposits to avoid reporting requirements.
posted by fogovonslack at 6:52 AM on April 12, 2013

Ok, definitely don't do my one.
posted by windykites at 8:52 AM on April 12, 2013 [2 favorites]

IIRC, cash deposits 3K+ have to be reported.
posted by luckynerd at 9:52 AM on April 12, 2013

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