Are You Sure Your Estate Plan is in Order?
- Hoping to Avoid Probate
Seven Inherent Risks of Joint Ownership
Unfortunately, Sally’s situation isn’t that uncommon. Many people set up joint accounts without
understanding the risks involved. Below are seven nancial risks to consider before proceeding with
a joint ownership arrangement:
1. Lawsuits & Judgments
Any lawsuit or judgment led against a joint owner could put the account(s)and/or property at risk as it will be counted among the assets owned by the child involved in the lawsuit.
2. Bankruptcy3. Incapacity7. Family Disputes6. Loss of Independence5. Theft4. Divorce
Any joint owner who les bankruptcy puts your account(s) and/or property at risk of being taken, as they will be counted among the assets owned by the child going through bankruptcy. Assets that the creditors will be ghting for to settleany outstanding obligations. Any joint owner who becomes incapacitated could place your account(s) or property at risk as losing a job, and their income, while at the same time juggling excessive medical bills could quickly become to much nancially. Any joint owner who end up in divorce proceedings could place your account(s)or property at risk as they will have to report any assets they have an ownershipinterest in. This could result in your assets being given to a child’s ex-spouse.
While no one thinks it would happen to them, the facts are the facts. Manyretirees have been taken advantage of as making children or anyone for that matter a joint owner on your accounts gives them the ability to spend, withdraw, or take loans against your accounts. All without the need for your approval.
Any actions you may want to take, such as renancing, selling, or taking out asecond mortgage against real estate owned jointly requires the approval and signatureof all joint owners, meaning you now have to gain the approval of all joint owners.When siblings are made joint owners they are legally entitled to the account or prop-erty, even though you may have promised your kids something different. Just because you tell them one thing doesn’t mean they will follow through with your wishes after you’re gone. This often happens when you make the “responsible child” the joint owner and instruct them how to divide the assets when you’re gone. In many cases,the “responsible child” may decide to tie up the account, dragging their feet on dividing up among the other siblings, causing in many cases permanent divisions in the family.