The Five Components of a Good Estate Plan
Many people believe that if they have a will, their estate planning is complete, but there is much more to a solid estate pla...Read more
Many people, especially seniors, see joint ownership as an easy way to avoid probate and plan for incapacity, but there are major drawbacks to joint accounts.
When people own property as joint tenants each person has an equal ownership interest in the property. If one joint tenant dies, his or her interest immediately ceases to exist and the other joint tenant owns the entire property. Joint ownership of investment and bank accounts can be a cheap and easy way to avoid probate since joint property passes automatically to the joint owner at death. In addition, joint ownership can also be an easy way to plan for incapacity since the joint owner of accounts can pay bills and manage investments if the primary owner falls ill or suffers from dementia. These are all true benefits of joint ownership, but three potential problems with joint ownership:
Joint accounts do work well in two situations. First, when a senior has just one child and wants everything to go to him or her, joint accounts can be a simple way to provide for succession and asset management. It has some of the risks described above, but for many clients the risks are outweighed by the convenience of joint accounts.
Second, it can be useful to put one or more children on one's checking account to pay customary bills and to have access to funds in the event of incapacity or death. Since these working accounts usually do not consist of the bulk of a client's estate, the risks listed above are relatively minor.
For the rest of a senior's assets, wills, trusts and durable powers of attorney are much better planning tools. They do not put the senior's assets at risk. They provide that the estate will be distributed as the senior wishes without constantly rejiggering account values or in the event of a child's incapacity or death. And they provide for asset management in the event of the senior's incapacity.
For more on the different ways to co-own propertly, click here.
Talk to your attorney about what the best plan for you is. To find an attorney near you, go here: https://www.elderlawanswers.com/elder-law-attorneys.