Elderly parents regularly set up bank accounts — checking, savings, certificates of deposit — in joint tenancy with a child. They do this thinking they are doing the right thing for their family (avoiding probate) and often at the suggestion of a poorly trained new accounts person at a financial institution.
Sometimes in life things that first appear simple can, well, end up rather complex. So it is with an often overused and misunderstood form of property title known by its full legal expression as “Joint Tenancy with Rights of Survivorship.”
The subject of joint tenancy was taken up recently by gazette.com, the online version of The Gazette newspaper in Colorado Springs. The article is titled “Money & the Law: Joint tenancy can have unexpected consequences,” and the author notes that elderly parents commonly add an adult child as a “joint owner” on their assets. While the parents’ intentions are good (e.g., to avoid probate), they come with some significant risks.
As the article notes, one risk is that of unintentionally disinheriting any children not added as joint tenants. This can cause family quarrels lasting for generations. Another problem not discussed in the article includes subjecting jointly held assets to the divorces, lawsuits, and creditors of each joint owner.
In conclusion, add third parties (e.g., children and friends) as joint tenants to your assets only after consulting with your estate planning attorney. Consider it “legal dynamite” – handle with care.
Reference: The Gazette (December 16, 2012) “Money & the Law: Joint tenancy can have unexpected consequences”