The perils of joint tenancy ownership. Many potential clients tell me that they do not need estate planning. Instead of doing a will or a trust, they explain that they will just put their children on title to the house and bank accounts. When I hear this, I look at them and ask if they have really thought that decision through. Usually they say they have. I then proceed to point out the problems with their money saving “solution” to estate planning. Problems such as:
1. A child, once added to an account, having the ability to remove all of the money at any time.
2. A child, once added to title to an asset, has that asset available to satisfy that child’s creditors. In addition, that asset is now subject to attachment should the child ever have a judgment against him or her.
3. A child, once added to title to the house, dying before the parent, thereby giving title back to the parent and leaving the deceased child’s family with nothing.
These are just a number of common issues that come up with joint tenancy ownership that people usually do not think about. When I explain to the potential client the downfalls of joint tenancy ownership, they realize that the subject was far more complicated than they thought and that they should, in fact, do a complete estate plan, including a will, trust, power of attorney, and advanced healthcare directive, to avoid these problems.
Rather than engage in self-help that may result in significant and severe unintended consequences, consult with an estate planning attorney who can sit down and explore all of your options, including adding people as joint tenants, and what the pros and cons are of each option.
Gerald W. Cummings is a San Jose, California attorney who helps families find peace of mind. He is on the web at www.cummingslegal.com and can be reached at (408) 286-2122.
