Estate Planning: Jointly owned assets and wills

A: The first thing to understand is that wills address probate assets. Probate assets are those assets that are not jointly owned and which do not have beneficiary designations assigned to them. In other words, they are assets whose ownership after a death has to be determined.

Assuming that your daughter is a joint owner on the checking account, it will belong to her at the time of your death. A checking account titled as joint tenants with rights of survivorship is not a probate asset and the will won’t control its distribution.

The presumption is that if the account was owned jointly, the parties understood that the surviving joint tenant would own the account after death. The presumption can be rebutted but I’ve never seen a successful challenge to a surviving joint tenant’s claim of ownership.

Now if the daughter ends up owning the account, that doesn’t necessarily mean that she won’t share it with her siblings. In fact, she probably will. The problem is that there isn’t really a way to force her to share the funds if she doesn’t want to. She could send all of the siblings a check or she could winter in Aruba. The choice is hers.

Another concern is potential gifting issues. Remember, if your daughter receives all of the money and then sends checks to each of her siblings, she may be subject to gift reporting. That doesn’t mean that there will be any actual gift tax due, but reporting to the IRS may be required.

If you want the funds to be controlled by the will, you need to make sure that the account is a probate asset. That means that your daughter should be removed from the title of the account. If there is no joint owner or beneficiary designation on the account, it will be a probate asset and the will will control.

If you still want your daughter to have access to the account but not own it upon your passing, make sure that she is listed as a signatory on the account but not as an owner. Another option, and one that I prefer, is to execute a power of attorney and designate your daughter as Attorney-in-Fact (AIF). As an AIF, you daughter should be able access the account and write checks on your behalf but not retain any kind of an ownership interest. Her relationship will also be as a fiduciary in which she can only do things for your benefit and not her own.

Personally, I don’t like to add loved ones to an account simply for convenience. There a lot of better ways to grant access to a bank account without actually granting an ownership interest in it.