ESTATE PLANNING: Joint ownership isn't always the solution

2014-03-01T16:47:00Z ESTATE PLANNING: Joint ownership isn't always the solutionChristopher W. Yugo Times Business Columnist
March 01, 2014 4:47 pm  • 

Q: I know you have said you don't like adding children as joint owners on bank accounts, but I can't remember why. It seems like adding a child on the account would be a good thing. Why don't you like it?

A: It's not that I don't like it. Joint ownership is just not normally my first thought when planning to avoid probate. This is especially true when you have options.

Let's face it: avoiding probate is a common goal in estate planning. Often times people don't understand the probate process, and it just sounds kind of scary. Add in the fact there will be attorneys involved and a judge, and people get the willies. It's no wonder folks want to avoid probate like the plague.

Joint ownership is certainly one way to avoid probate, and if you talk to your local bank teller, it sounds pretty good.

Customer: "Let me get this straight. If I add Bobby to my account, he can write checks for me and he gets it when I die?"

Teller: "Yup."

Customer: "Cool, where do I sign?"

The teller is right. If you name Bobby joint owner on your account, he can write checks for you and he'll get the money at your death. But what the teller didn't tell you is Bobby will have an ownership interest in the account and can take all of the money out at any time.

Bobby's creditors may also be able to attach the account to try to recover money that Bobby may owe them and the IRS and/or the Indiana Department of Revenue can lien the account because Bobby has not tax issues. The teller didn't lie to you. He just may not have known.

Yup, if you give Bobby an ownership interest, you get the good and the bad things that come with owning property jointly.

This is the reason joint ownership isn't my first solution to probate avoidance. Another reason is it's so easy to accomplish the goal of giving Bobby the ability to write checks on your behalf and avoid probate without opening yourself up to the potential problems.

Name Bobby attorney-in-fact in a power of attorney and make him Payable on Death (POD) beneficiary. That way, he can write your checks, get your money without probate and you don't have to worry about getting a thank you letter from the IRS for helping him pay off his taxes.

When searching for an estate planning solution, the easiest solution isn't always the best one. Sometimes it's worth a little extra planning to solve a problem without creating a new one.

Opinions are solely the writer's. Christopher W. Yugo is a Crown Point attorney. Address questions to Yugo in care of The Times, 601 W. 45th Ave., Munster, IN, 46321 or to Yugo's information is meant to be general in nature. Specific legal, tax, or insurance questions should be referred to your attorney, accountant or estate-planning specialist.

Copyright 2014 All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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