There are always those looking for a quick fix, and more often than not they wind up being penny wise and pound foolish. This certainly comes into play when it comes to estate planning as people try to patch together a number of so-called “simple solutions.”
One of these is joint ownership, a concept that is sometimes called the “poor person’s estate plan.” The way that it works is that you make someone, perhaps one of your children, the joint owner of your bank accounts, brokerage accounts, and perhaps even your home.
When you pass away the child becomes the sole owner of these things, and the probate process is not a factor.
All the above may sound neat and tidy on the surface, but there are some serious problems with joint ownership. For one thing, let’s say that you have more than one child but you have made your eldest son the joint owner of your property.
You instruct your son regarding how you want this property distributed after you die.
Once you are gone your son owns the property outright, and he or she is not legally compelled to give anything to anyone. This is one of the problems with joint ownership.
Another one is the fact that creditors and former spouses of the joint owner could try to attach your funds. They are fair game because the funds technically belong to the other owner just as much as they belong to you.
There is also the possibility of the joint owner using the funds for his or her own purposes without your permission.
These are just a few of the problems with joint ownership. You would do well to take pause before assuming that this approach is a viable one.