Query: Joint and Beneficiary-Designated Accounts
Context: Many people consider joint accounts, beneficiary-designated accounts, or payable-on-death accounts to avoid the need for a will. While these provisions may bypass the need for a will and provide that the joint account holder or designee will receive your assets immediately after your death, there is no protection or guidance in the event that an individual is not able to receive it, or should you become incapacitated prior to death.
If, for example, you own something joint with a spouse and she is disabled at the time of your death, all your assets will go to her and then be available to pay for her costs in a nursing home. Additionally, if you own assets joint with your children, those assets can be lost to your children’s creditors. If your child ends up in bankruptcy or divorce, oftentimes your assets may end up in the hands of a child’s former spouse or the bankruptcy court in favor of your child’s creditors.
Thus, having joint accounts or beneficiary-designated accounts can be very dangerous. In limited circumstances, they work, but we recommend a comprehensive review of your accounts to determine the risks to your family and the best way to hold title to your assets.