Be Warned: These Are Banking Mistakes That Can Cause You Trouble
Consumers are often warned not to waste money for good and obvious reasons – you will have less of it. But it can’t hurt to occasionally remind yourself that banking or financial errors can also cost you peace of mind and even your freedom.
In fact, when it comes to banking mistakes that can get you into legal trouble, there is almost no limit on the possibilities, according to legal experts who specialise in corporate and international law and estate planning.
This is hardly a comprehensive list, but there are a few snares you should be careful about and not to step into.
Here are some banking related mistakes that can cause you legal nightmare, according to www.money.usnews.com.
1. Be attentive when putting your signature on paperwork
It is common knowledge that it is often a bad idea to co-sign for a loan because if the borrower does not pay it back, you will be legally responsible to pay it back. In some countries, especially in Nigeria, the bank may even be able to come after your assets without going after the borrower.
However, sometimes bank customers take on a loved one’s financial responsibility without really understanding what they are getting into, according to Victor Medina, a registered investment advisor with Private Client Capital Group based in the United States.
Medina says that he has run into clients who have had a relative move into a long-term facility, and the spouse or child has signed on as the person responsible for paying the bills to the assisted living facility.
“That can be a terrible mistake. You are essentially signing as the guarantor or private insurance company to pay the assisted living facility bills if your loved one can’t. So they are coming after you if the elder runs out of money” Medina says.
2. Be careful about mixing your personal wealth with business assets
Many self-employed people stumble into legal trouble when they have their business account as their personal bank account, Yolofsky says.
What’s the problem? If sued, “the person opens themselves up to having the corporate veil pierced and exposing their personal assets to liability.”
Think about it. You can’t very well argue in court that your personal assets shouldn’t be handed over to somebody suing you if for years you’ve been dipping into your business bank account for your own needs or spending your own personal money on your business. You can’t draw a line between the two worlds the moment an attorney comes after you. Well, you can try, but you have made it harder to make your case.
The government especially internal revenue service officials also don’t really like it when you mix personal and business assets, Yolofsky adds.
3. Be diligent paying your taxes
Most tax experts will tell you that you aren’t likely to go to jail if you mess up with your taxes, but with the full weight of the law behind them, the tax revenue authority officials can certainly drain your wallet – and in extreme cases, send you to jail if you don’t comply with their tax mandates. This is possible in Nigeria.
4. Be wise loaning money to friends and family
Don’t worry; you probably won’t get into trouble with the law if you lend family and friends money. But if you don’t properly document the loan, you won’t be able to leverage the law to get the money back, if you wanted to go that route.
“If the person making the loan wants to be repaid, then the loan agreement, a promissory note, should be written out and signed by both parties,” Yolofsky says.
“In some states, courts will not enforce loans made without proper documentation,” he adds.
Of course, Yolofsky says it’s smart to loan money to friends and family with whom you want to stay on good terms, “with the expectation that the money is not ever coming back.”
5. Be careful with all paperwork, period
Julian Rubinstein, a financial advisor, says he recently had a client who made a mistake when filling out some bankruptcy forms.
“He made these common innocent mistakes that are considered fraud. This client is now in jail,” Rubinstein says.
Jail? Well, it can happen. If you mix money with being careless or simply not understanding your paperwork, as unlikely as it may be, you could find yourself behind the bars.
Rubinstein says that this particular client wound up in jail because he had recently cashed in his individual retirement account and didn’t declare the distributions as income in his paperwork. The court saw that as fraud. In Nigeria, the Federal Government is planning to impose taxes on pensions and retirement benefits. If this scales through, then self-employed people may be in for some legal troubles if they make some mistakes.
Illustrative photo Consumers are often warned not to waste money for good and obvious reasons – you will have less of it. But it can’t hurt to occasionally remind yourself that banking or financial errors can also cost you peace of mind and even your freedom. In fact, when it comes...firstname.lastname@example.orgAdministratorA blogger #AMonpointTV is my brand and am onpoint #Thank You For ReadingAM onpoint TV | Information & Entertainment Platform