Son can’t flee bank checking account

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Dear Dr. Don,
My husband is listed on a joint bank account with his mother named as the primary holder. His mother has Alzheimer’s disease. My husband’s sister took their mom to live at her home in another state and took over her Social Security and other income. That income was going into their joint bank account to pay for his mom’s mortgage, life insurance and medical premiums.

With no money in the account to cover these expenses, we have incurred bounced-check fees, as well as getting stuck paying for bills that aren’t even ours. Even though there’s no money in the account, they still keep putting charges through! My husband blocked the account, but the bank won’t do that indefinitely, and we can’t afford to pay these bills for his mother.

We need to get my husband’s name off of the account, but according to the bank, only the primary account holder can remove his name, which makes zero sense to me. My husband’s mother will probably not return to her home state anytime soon (if ever) since she’s incapacitated, and we need to settle this ASAP.

The bank claims it needs a death certificate to close the account, or his mom will have to come into the branch, remove his name and open a new account. We don’t want to close the account — just get my husband’s name off of it. In the meantime, this bank will rack up fees and ruin my husband’s credit. I’d appreciate any help and/or guidance.
— Concerned Kimi

Dear Kimi,
I don’t have an easy way to force the bank to remove your husband’s name from the checking account, but his credit history typically isn’t affected by the banking issues. Instead, it’s the consumer report on his banking relationships that takes the hit.

ChexSystems, one of the consumer reporting agencies, reports insufficient funds and other banking issues. Negative banking information stays on the consumer report for five years. Banks can close an account relationship based on a negative report, which puts his other bank accounts at risk as well.

Your husband can get a free copy of his consumer banking report once each year, just like he can with his credit reports. He can order the report and get more information from ChexSystems’ Web site.

If it is a joint checking account and he is not just an authorized signer on the account, he would be able to close the account and end his problems. This doesn’t appear to be the case because the bank has informed him that he would need to prove his mother is dead for him to close the account. It is possible he was misinformed about his ability to close the account and he should discuss this with the branch manager.

Even if he is a joint owner on the account, closing the checking account won’t end his mother’s problems with the account because of the automatic debits for the mortgage payments and insurance premiums.

I’m assuming his sister somehow was able to open bank accounts with her mother to accept the Social Security income and other income. If she’s got some measure of control over her mother’s income, why isn’t she diverting some of that income toward the insurance premiums and mortgage payments? It would be a shame for your mother-in-law to lose the equity in the house through foreclosure procedures.

Letting the insurance policy lapse for nonpayment of premiums also has important ramifications. It appears your husband and his sister need to have a heart-to-heart about their mother’s care and finances.

On other fronts, the family needs more help than I can give you in a column. The family should be working with an attorney and possibly a family counselor. If your mother-in-law isn’t competent and there’s no durable power of attorney in place, the family may need to work toward establishing a guardianship to control her finances on her behalf.

Note: A special thanks to Ilene Sussman, a branch manager at First National Bank of Chester County in West Chester, Pa., for her assistance in answering this reader’s question.

Read more Dr. Don columns for additional personal finance advice.