Beware, Joint Ownership Can Destroy Your Estate Plan

One of the biggest problems people make in estate planning is joint ownership. We are not talking about when a husband and wife have joint bank accounts or where their home is held in both their names which is typical.

When a parent adds a child’s name to an asset such as a bank account, or real estate, this often spells disaster. The parent needs help with paying their bills and sometimes to avoid probate puts a son or daughter’s name on title. This is a big mistake.

Assume that a mother is failing, and her son Bill’s name is added to her checking, savings accounts, stock accounts, and even the family home. Mom thinks she is doing the right thing by avoiding probate.

The biggest problems with joint ownership between generations are as follows:

1)         Creditors.

Bill may have some creditors or even be sued because of a traffic accident. But because he is a joint owner with mom, the creditor can claim some or all of his assets. Once mom adds Bill’s name he has equal rights to the money and the assets. Mom had better worry about Bill’s debts.

2)         Divorce.

Bill’s wife files for divorce and she claims the joint assets as part of the marital estate during the divorce. Bill’s divorcing wife has to sign off on the sale or exchange even though her name is not on the accounts or real estate.

3)         Borrowing.

Suppose Bill is short on money. He needs just a little money to carry him through the next few months and he borrows money from mom’s estate with the idea that he will pay it back later.

4)         Doesn’t Have to Share.

Now mom has passed on and Bill’s two siblings want to talk about the estate but there is no estate because everything now is in Bill’s name. Under the law, Bill gets to keep everything as he is the surviving joint owner.

5)         Family Fighting.

Joint ownership often causes a court fight. If Bill won’t share, the estate, his siblings can sue him and claim mom’s actual intent was not for him to keep the money but simply added his name for convenience to make it easier for mom to pay her bills.

Beware Joint Ownership can destroy even the best estate plan.

Call W. Bailey Smith (the Trust Doctor) at (949) 833-8891 to review your current estate plan.

Bailey has created over 7,000 estate plans!

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