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Joint Ownership

Most common in married couples’ financial situations is joint ownership. Individual access to bank accounts can be had by either joint owner, even if the other joint owner is incapacitated. For this reason, elderly people sometimes place an adult child’s name on their accounts. This is a simple and effective way of insuring that the child can continue to pay the parent’s bills if the parent is unable to do so. It does, however, give the child the legal ability to withdraw everything from the entire account. Placing an adult child’s name jointly on an asset can also present problems to the parent if the child incurs debts, is sued, or gets divorced. Since joint ownership means just that, the result can be that the asset which was once solely the parent’s can become subject to the adult child’s creditors or soon to be ex-spouse.

While joint tenancy can transfer assets at death without any type of probate proceedings, the legal implications of joint tenancy are governed by state law and will vary from state to state. In some states with community property law, property owned by spouses in joint tenancy will not receive the same tax treatment when one spouse dies. The joint tenancy property can lose important benefits otherwise available to the survivor. Finally, because jointly-owned assets transfer directly to the survivor, such property passes outside of a will. A parent can unintentionally leave his or her property to the child who is the joint owner, rather than having the property divided equally among several children.

Inside Joint Ownership