Sometimes you can hear about a particular course of action that sounds great on the surface. However, when you dig a little bit deeper you may identify some difficulties. This often comes into play where estate planning is concerned.
One of these quick fixes is the idea that you can simply add another owner to your bank accounts, brokerage accounts, and your home. When you die the co-owner becomes the sole owner of the property in question. Voilà, there you have it, a ready-made estate plan.
In reality, things are not quite as simple as this because there are serious problems that can present themselves if you choose to use joint ownership as an estate planning tool.
You have to understand the fact that the person that you add to an account is now a co-owner and has immediate access to the funds. He or she could clean out the bank account in a single day and there would be nothing that you could do about it legally.
While the logical response to the above would be the assertion that the person you choose would never do such a thing, what about creditors, claimants, and perhaps a former spouse? If your co-owner was the target of a lawsuit or perhaps a messy divorce the assets that you share would certainly be fair game.
These are just a couple of the problems with joint ownership, but there are other pitfalls as well. The wise course of action is to steer clear of so-called “easy answers.” If you take the time to discuss everything with a licensed estate planning lawyer you can be sure that unintended consequences don’t arise while you are living or after you pass away.
Author, President and Founding Attorney
Parman & Easterday