Sometimes you hear about some type of easy answer when it comes to estate planning, and joint ownership is one of these notions.
Most people who have a significant amount of life experience are going to be wary of so-called easy answers, but there are those who do buy into them. We would like to look at some of the difficulties that you can get yourself into if you decide that joint ownership is a good substitute for a properly constructed estate plan.
You can add another owner on your bank or brokerage accounts. You could do the same with your home. If you were to pass away the joint owner that you added would assume ownership of the property outside of the probate process.
Before you start adding someone to your property ownership documents you may want to consider a few things.
For one, anyone who wanted to collect money from the person you added as a joint owner could target your funds or property. Both of the joint owners are just that, mutual owners of the property in question. The co-owner’s creditors, former spouse, and/or litigants could seek to attach your property.
It is also possible that the person that you added as an owner may decide to use some (or all) of the funds for his or her own purposes.
And, if you were to instruct the co-owner to distribute the jointly owned assets among multiple family members after you pass away, he or she would not be compelled by law to do so.
These are a few of the potential pitfalls that you may want to consider if you are considering joint ownership as an alternative to a professionally prepared estate plan.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.