Joint Accounts

Joint bank accounts/investment accounts are generally a good practice between spouses, with some exceptions; joint bank accounts/investments with children or others can be troublesome. Between spouses joint accounts work well to transfer an asset to a survivor and it minimizes the probate process, at least as to that asset, however, it is necessary to have your entire estate plan in mind when titling assets for ownership purposes. For example, if you have an investment account jointly owned by you and your spouse, upon the passing of the first of you, it will automatically go to the survivor of you pursuant to the account document, not according to your Last Will. If that is your ultimate plan, then the joint ownership of the account accomplishes that end.

Assume however, that this is your second marriage and you have children from your first relationship, children with your current spouse and your spouse has children from a first relationship. If that investment is the only investment you have and assuming that your spouse will take care of all of his children from you and his prior relationship, do you want the entire asset to go to your spouse in its entirety with none to your children from your first relationship? Remember, the two of you may have made provision for all the children in your Wills, but you and/or your spouse can change each of your own Wills at any time even after one of you has pass away, possibly removing some of the children, which means that you need to determine the goals of your estate plan and how assets must be titled for that plan to be accomplished at the time of your death.

The bigger concern is having a child or other person on an account where all the assets belong to you. It is one thing to have someone’s name on your account as an authorized signer so they can sign checks versus as a co-owner. As a signer, your estate plan remains in place; as a co-owner, that may or may not be the case. As a co-owner, upon the passing of the first of you, the asset goes to the survivor. What if the you and Mom contribute deposits into the account from each of your own monies and you each write your own checks out, similar to a husband and wife on a joint checking account? If your child gets into financial trouble and has creditors, the account with both of your names is accessible to your child’s creditors. Similarly, if Mom now needs Medicaid (Title XIX) that checkbook becomes a major issue. All the deposits and expenses of the last five years will be analyzed and will need to be accounted for. Depending on how good your records are, it can be performed and reconciled, but it will be a major undertaking and our experience has been that the records are not usually good enough to satisfy the Department of Social Services. All undocumented deposits will be considered Mom’s, more importantly, and usually to Mom’s detriment, all unexplained withdrawals/checks/gifts/expenses will be considered Mom’s also and if they are considered gifts, it can be a major problem in obtaining Medicaid for Mom. As a general rule, do not mix your assets with a parent’s or child’s assets. If you wish, add them as an authorized signer only. It is the cleaner, safer approach that will make your life easier if Medicaid ever comes into play.

“When results matter, experience counts”

One Comment

  1. avatar paul beisler
    Posted June 20, 2017 at 1:06 pm | Permalink

    very informative thanks

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