4 Potential Perils of Joint Ownership of Assets
It is not unusual for a parent to add an adult child as a joint owner of property, bank accounts, investment accounts or other assets, but there are risks to choosing joint ownership over basic estate planning strategies to achieve the same objective.
The four primary perils of joint ownership include:
1. Divorce. If you name one of your adult children as a joint owner of your assets and they become involved in a divorce, the child's soon-to-be-ex could claim that the joint assets are part of the marital estate and wind up with half of your assets.
2. Debt. If the joint owner you name has lots of debt and has to declare bankruptcy, the creditors could try to access your assets to satisfy the debt.
3. Unauthorized use. If the joint owner has a history of financial problems, they may use some of your assets to pay off their debt without your authorization.
4. Inheritance. If you have named an adult child as the surviving joint owner of any of your assets, they do not have to share any of those assets with siblings or other heirs after you die, even if you have other instructions for the disposition of the assets in your will.
You can use a living trust, a will or powers of attorney to achieve some of the same goals that joint ownership offers without risking your assets to these common perils. Your estate planning attorney can recommend the best strategy for your individual situation.
The Flanigan Law Group provides Southern California residents with personal attention for estate planning, administration and litigation legal services. When disputes between families, arise, they are very successful in resolving legal estate issues quickly and efficiently while preserving financial and emotional resources. Contact the Flanigan Law Group at 949-450-0041.