Sandy’s husband of twenty-seven years had just died. All that was left of her family was her twenty-two year-old daughter and herself. Of course there were one or two cousins out there, too, but they had never been close. “What a lonely place to be,” she thought. “I really miss him.”
Before long, life insurance proceeds arrived in the mail—a check for $750,000. “Wow, that seems like a lot of money,” Sandy thought. “I don’t know if I want to invest it or just keep it safe in the bank.”
“For right now maybe I should deposit $250,000 in three different banks, so each deposit will be FDIC insured. That would bring me comfort, something I can actually count on for the future.”
While driving to the first bank, Sandy decided it made sense to put the funds in a joint account with her daughter. After all, her daughter would inherit the funds someday anyway. She chose the JTWROS (joint tenants with rights of survivorship) account registration. This registration made them each a full owner of the account with access to the funds in the account.
Sandy was satisfied with her decision for some time. Then she incurred a major bill. She needed to replace her roof. Off she went to the bank to take the money she would need from one of her accounts.
Sandy was in for a shock. Her original deposit of $250,000 had shrunken to $7,000. “How can this be?” she asked. The bank associate informed her that because her account registration was JTWROS, the other person on the account had withdrawn funds from time to time, and now only $7,000 remained.