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Dangers of Joint Tenancy in Estate Planning

Posted by Andrew Byers | May 07, 2015 | 0 Comments

I am a widow. Should I add my daughter to my bank accounts?

Joint ownership of real estate or accounts – which is known as “joint tenancy” – may seem convenient at the outset, particularly if it is becoming difficult to pay bills and manage household finances properly. However, a joint tenancy can quickly undo an estate plan, allowing for an unintentional windfall to one beneficiary while the others are left with little. Consider the following example of joint tenancy gone awry, which is an all-too-common scenario, particularly for those with well-meaning children looking to help ease the burden for aging parents: 

Jane was married for 52 years, and is facing some difficulty in managing her household finances following the death of her husband. Thinking it would be more convenient for everyone, Jane added her daughter Sheila to several of her accounts at the local bank – including her checking and savings accounts. For the next decade, Sheila dutifully helped her mother pay the modest monthly bills. During this time, proceeds from Social Security, her husband's pension, and an annuity began to accrue in the savings account. 

Upon Jane's death, her Last Will and Testament directed that the entirety of her estate be divided into four portions, one for each of her children. However, as joint tenant on the savings account, Sheila became sole owner – and the recipient of more than $175,000 in cash. 

As the above example hopefully illustrates, leaving high-value assets (including homes, cars, boats, and accounts) titled jointly with other individuals can quickly undo an estate plan. Fortunately, there are other options to consider if assistance with bills and financial transactions is an issue. 

In the above example, Jane could have easily executed a power of attorney in favor of Sheila, which would have given her daughter access to Jane's accounts and assets in order to help effectuate the typical household financial transactions. If competency is an issue, it may be necessary for Sheila to obtain a guardianship over her mother, which would also allow her to help with legal and financial transactions once Jane is not mentally competent to execute a power of attorney. 

For more information about joint tenancy, and alternatives to this option, please contact experienced estate planning attorney Andrew Byers by calling (248)301-1511. His office is proud to serve clients in Auburn Hills and throughout Oakland County, Michigan.

About the Author

Andrew Byers

Andrew Byers' elder law practice focuses on the legal needs of older clients and their families, and works with a variety of legal tools and techniques to meet the goals and objectives of the older client. Under this holistic approach, I handle estate and longevity planning issues and counsel cli...

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