Tuesday, July 22, 2014
While many people may view joint accounts as an effective way to avoid probate since joint property passes automatically to the joint owner at death, there are several drawbacks to joint ownership of investment:
- Risk. Joint owners of accounts have total access and the ability to use the funds for their own purposes. Additionally, the funds are available are available to the creditors of all joint owners and could be considered as belonging to all joint owners should they apply for public benefits or financial aid.
- Inequity. If a senior has one or more children on certain accounts, at death some children may end up inheriting more than others. There is no guarantee that all of the children will share equally.
- Unexpected. If a child passes away before the parent, a system based on joint accounts can fail. It may be necessary to seek conservatorship to manage funds or they may pass to surviving children with nothing or a small portion going to the deceased child’s family.
Joint accounts are not entirely cumbersome and can work well in several situations. When a senior has just one child and wants everything to go to him, joint accounts can be a great way to provide for succession and asset management. Also, joint accounts can be useful to put one or more children on one’s checking account to pay customary bills and have access to funds in the event of incapacity or death.
See Three Reasons Why Joint Accounts May Be A Poor Estate Plan, Elder Law Answers, July 18, 2014.