Are There Problems with Joint Assets?

Yes, there can be.

Many of my new clients tell me that they do not need certain estate planning documents because their adult child (or other trusted person) is a joint owner on their bank accounts.  They believe that this will avoid the need for probate and will allow the other person to have access to the accounts if they become incapacitated.

Doing this is usually not worth the risk.

Risk #1:  The joint holder will have complete access to your money because once they become a joint holder, it is their money too.  The joint holder can also have your name removed from the account. This is done by someone you believed you could trust; however, most cases of elder financial exploitation are perpetrated by family members and trusted friends.

Risk #2:  You could lose Medicaid eligibility for long term nursing care; when you put someone else’s name on your accounts, you are legally making a gift to them.  This could cause you to be ineligible for Medicaid for up to 5 years from the date of the gift.

Risk #3: There are circumstances beyond the joint holder’s control which could put your property at risk.  A judgment against the joint holder (think car accident) could result in the loss of your assets. 

Risk #4: Putting someone else’s name on your primary residence is never worth the risk.  In Florida, your homestead has constitutional protection against any creditor. But, if the joint holder does not live in the home, it is not their homestead.  The creditors of the joint holder can reach this asset which could result in the loss of your home.

Risk #5: Adverse Tax Consequences. Gifting property to a beneficiary during your lifetime (and this is what putting someone else’s name on your asset means) creates certain tax consequences which are much less favorable than allowing your beneficiary to inherit the property. 

My advice is that you not put property in joint names with persons other than your spouse.  The avoidance of probate is not worth risking the loss of your assets. Consider other options to avoid probate such as a revocable trust or ladybird deed.  Handle incapacity issues with a Durable Power of Attorney.

Call the Law Offices of Debra G. Simms at 386.256.4882 to learn more.

This blog post is not case-specific and is provided only for educational purposes and is not intended to provide specific legal advice. Blog topics may or may not be updated and entries may be out-of-date at the time you view them.

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