By Bernard A. Krooks, Certified Elder Law Attorney
Why Shouldn’t I Put my Accounts in Joint Tenancy With My Children? This is one of my most common questions we get from clients. They want to put their children’s names on their accounts to avoid probate or to give the children access to the accounts in case something happens to the parent. While there may be circumstances where this would be appropriate, in most cases it is a mistake. Nevertheless, clients don’t believe us and end up spending hours scouring the internet looking for information about how to put their children’s names on their accounts and why they should do such a thing.
So, what’s wrong with joint tenancy?
First and foremost, joint tenancy is not a substitute for appropriate estate planning. For example, you and your child might not always get along. You could have different views on when it is appropriate to cash in the account or to sell a house which has both names on it. Are you ready to let your joint tenant have veto power over your decision?
Another thing that people don’t think about is that your assets could become subject to the claims of creditors of your joint tenant. So, if your child is involved in a lawsuit or a messy divorce, your assets could be used to satisfy whatever liabilities the child has — all while you are still alive.
Setting up a joint tenancy is sometimes irrevocable. That means you can’t change your mind later without your joint tenant’s signature. Also, you might lose beneficial property or income tax treatment. Your children (including the joint tenant) might lose the favorable income tax treatment of inherited property.
If you put an asset in joint tenancy with the daughter you trust, and she does exactly what she’s supposed to, she will be making a gift. Even with the enhanced federal estate and gift tax exemption, the gift still might require the filing of a gift tax return with the IRS.
What will your family do when your will says something different from your joint tenancy? Readers of this column know that the joint tenancy or beneficiary designations will control who gets the property and this may cause confusion, or even worse, litigation, to those involved.
We could go on. But here’s the real issue: why not incur the very small cost to get good legal advice and make sure you’ve done this right? Joint tenancy is not a good substitute for real planning.
You have worked hard for your assets, isn’t it worth the time and effort to make sure that they pass to the people you want upon your passing? Work with a competent estate planning attorney to make sure your estate planning goals and objectives are accomplished.
Bernard A. Krooks, Esq., is a founding partner of Littman Krooks LLP and has been honored as one of the “Best Lawyers” in America for each of the last seven year, past President of the National Academy of Elder Law Attorneys (NAELA), past President of the New York Chapter of NAELA and also served as chair of the Elder Law Section of the New York State Bar Association. He has been selected as a “New York Super Lawyer” since 2006. Call 914-684-2100 or visit elderlawnewyork.com.