A friend is preparing to leave her husband (it has been a long time coming and will be good for her and her kids). Her husband is not the most financially responsible person and tends to piss away whatever money is in their joint bank account.
So she asked my wife and me to open a savings account name so she can build up a little cushion for the transition when she moves. She’ll give us a check, we deposit it, and when she moves, she’ll have something to help with moving expenses.
Is there any way this can come back and bite us? Tax issues? Hiding funds?
I’m not a banker, but every time I’ve opened an account a signature card and social security number has been required. Is the request to have the account in her name or in yours? Why doesn’t she just open her own account? A married woman can have an account in her own name and her husband wouldn’t have access to it.
If the account is in your name, then legally you could take all the money and it would not be stealing. I guess she trusts you a lot. The money she gives you would be considered a gift. When you give the money back, that’s also a gift. I believe that up to a fairly large amount – several thousand dollars – there is no tax issue. Above that amount the giver has to pay a gift tax. A single deposit of, I think, $10,000 or more triggers an inquiry.
Again, I’m not a banker or a tax expert, just info I’ve picked up over the years.
I also can’t understand why you would need to open an account. I’m guessing she doesn’t want evidence around the house. She can have statements sent to a PO box which hubby doesn’t need to know about (also a good idea if she’s doing other things like corresponding with lawyers, courts, etc. ). Or if you’re agreeable she can have them sent “care of” you and your address, and leave the passbook with you too.
Also, she should get a safety deposit box for any other stuff she doesn’t want hubby to see. Unless you’re willing to be her safety deposit box.
Here’s what I assume may have happened, based on my decade-ago experience as a bank CSR. The woman in question may have had a joint demand deposit account (that is, checking or savings account) with her husband, which he overdrew to an amount she cannot easily or quickly repay. The bank has probably reported her to Cheksystems (or whatever the contemporary equivalent is), and as a result most banks (and certainly no national bank) will let her open an account until she handles the old claim.
This could have happened, incidentally, even if husband and wife had separate checking accounts. If Bill and Amy Smith each have a checking account at Bank of America, say, and neither is an owner on the other’s account; and they also have a joint savings account; then if the joint account is overdrawn by a huge amount, BoA can and will go into either or both separate accounts to address that overdraught. This can cause the individual accounts to go into collections and reported to Cheksystems, preventing Bill & Amy from opening an account anywhere.
Troutman, I would not do as your friend is suggesting; her plan is fraught with danger for both of you, even if you both are entirely aboveboard. (What if one of you gets sued? Goes into overdraught for another reason?) Instead she may wish to go to accountnow.com and get a prepaid Visa card she can fill via direct deposit or by deposits at an affiliated ATM. She can get similar services through WalMart, though I can’t think of the name of the card they use; she should go to a WM and check out their money center.
Thanks for the feedback. The account would be in my wife’s name. The total amount won’t be anywhere close to the IRS $13K gift tax limit.
Yes, she’s trying to avoid a big scene if he discovers the statements. He can be pretty manipulative.
You’re right the P.O. box and safety deposit box would be good options. I think she’s just so stressed with all this (understandably) that she’s looking for easy solutions where possible. This seemed like something we could help her out with, as long as it doesn’t make things worse down the road.
Not to be full of myself, but I think the prepaid Visa option is going to be easier for her than her current plan, which will require her to go to you every time she wants money. The safety deposit box and PO box would be wise as well.
Not the best** long-term **option, but she can also keep just plain cash in a safe-deposit box for a while, and then she doesn’t have to go through you two to get at it when she needs it. In my experience, banks really don’t WANT you do to do this, but it’s not actually illegal as far as I’ve ever been able to determine.
The bank may well tell her she can’t do it (mine would have), but the regulation is unenforceable because the bank officer is not going to be present when she opens or closes the box. The CSR will go into the vault room with her, help unlock the box (if it’s a two-key system) and then leave her alone while she does her business.
But the cash-in-the-safety-deposit box seems a bad idea to me; she’ll only be able to get cash during bank hours.
And speaking as someone who has set foot in a bank maybe once in the last 10 years, a safety deposit box just sounds like a pain. She also probably doesn’t want to walk around with a wad of cash for an apartment deposit (especially in the areas she’ll be able to afford).
Prepaid card is still sounding like the best option.
Troutman, IANAL but for reasons like **Skald **mentions, I would stay out of this altogether unless you have some legal advice. Your friend’s lawyer may be able to advise. She certainly doesn’t want her standing diminished in the future because she tried to hide some assets.
However, that’s from a non-lawyer’s view of the legal aspects of this. Personally, I would go out on a limb for a friend if it seemed necessary.
Perhaps the best thing you could do is put away a little money yourself in case your friend needs to borrow it down the line.
True, but combine a safe-deposit fund with a pre-pay Visa, and she’s got two different fairly secure-from-ex sources of money, neither of which involve depending on friends to be willing and available to act as unofficial money-changers.
I agree tho - I wouldn’t suggest the safe-deposit cash as her primary money system.
However, as a friend, I’d be *really *hesitant to keep more than a couple of hundred dollars on tap for someone else, especially someone who I know is having life and financial difficulties. I’m not in a good enough place myself that I can be security for someone else if the shit hits the fan. Perhaps the OP are more financially secure and don’t need to feel as worried about that aspect of it.
You’re right about SDB’s being a pain for cash. They’re intended for things you need to keep safe, are not fungible, and are not likely to need in a hurry. Your passport. Grandma’s pearls. Deed to the house. Et cetera.
I had a customer who did keep “money” of a sort in her box. She was disabled on mental health issues and had a wealthy sister who sent her checks about once every three months. She’d come to the bank, cash the checks, and buy traveler’s checks, placing all but a hundred dollars worth in her safety box; and then come back once a week for another hundred bucks in traveler’s checks.
This is one of those situations where, if I were a third-party, I’d recommend walking away and not getting involved. But it’s tougher to approach it from a strictly logical position when it’s a friend who is overwhelmed and needs some help. I’m sure we’ll end up kicking in some of our money to help (only what we can afford). And whatever we give will be a gift, I have no illusions of a loan being repaid.
I’ll recommend both the prepaid card and safe deposit box. Given her stress levels, I don’t have much hope she can tackle the effort to get a box - it seems simple, but simple tasks aren’t always easy in these situations.
If I were her friend, I would go out of my way to help her go down the safety box/po box/prepaid visa path. As you say, she is very emotional and her judgment is not the best.
So do this. Tell her you worry that, if you open the bank account for her, you will be inconveniencing her because she’ll have to come to you every time she needs cash. Instead drive with her to WalMart and help her get the prepaid card. (Go first by yourself to suss the situation out first.) Then guide her to the bank and post office. Make sure you emphasize how the situation is easier for her if she has a place to store cash and essentials that is independent of you.
You should be able to open the account and give your address for the statements. Banks don’t check (or have her sign up for e-statements).
The bank will want a Social Security Number, but you can put down hers when you create the account. It will also need her signature to allow her to withdraw money.