Elderly parents regularly set up bank accounts — checking, savings, certificates of deposit — in joint tenancy with a child …Running around in the background here is a belief that the terms of a will are going to take priority over a joint tenancy designation in a bank account. That, however, is not correct.
Have you ever encountered a solution that seemed so simple at first, only to later realize it was as complex as could be? Been there, done that. This scenario of confusion is not lost of those who have tangled with “Joint Tenancy with Rights of Survivorship.”
The subject of joint tenancy was taken up recently by gazette.com, the online version of The Gazette newspaper in Colorado Springs. The article is titled “Money & the Law: Joint tenancy can have unexpected consequences,” and the author notes that elderly parents commonly add an adult child as a “joint owner” on their assets. While the parents’ intentions are good (e.g., to avoid probate), they come with some significant risks.
As the article notes, one risk is that of unintentionally disinheriting any children not added as joint tenants. This can cause family quarrels lasting for generations. Another problem not discussed in the article includes subjecting jointly held assets to the divorces, lawsuits, and creditors of each joint owner.
In conclusion, add third parties (e.g., children and friends) as joint tenants to your assets only after consulting with your estate planning attorney. Consider it “legal dynamite” – handle with care.
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Reference: The Gazette (December 16, 2012) “Money & the Law: Joint tenancy can have unexpected consequences”