The Hidden Perils of Joint Ownership - Part One

This blog series will focus on holding real estate and accounts jointly, and specifically, the hidden perils associated with using joint ownership with your adult children as an Estate Planning tool. These issues often come up when I am meeting with widows and widowers.

The following problems can arise when holding assets jointly:

  1. Creditors, lawsuits, divorce, and financial difficulties
  2. Needs-based benefits eligibility
  3. Undermining the Estate Plan
  4. Loss of control
  5. Misunderstood and/or unknown estate implications

Problem No. 1 – Creditors, Lawsuits, Divorce, and Financial Difficulties

First and foremost, holding property jointly leaves funds unprotected from the creditors of both owners. For our purposes today, let’s assume that “creditor” means any person or institution with a potential claim against a joint owner’s assets (e.g., a lender, a divorcing spouse, etc.). If a joint owner gets attacked by a creditor, a jointly-held asset may be subject to the creditor’s claim. This means that the asset could potentially be lost. For this reason in particular, it may not make sense for you to hold any assets of magnitude (relative to your wealth) jointly with any of your children.

As you can see, holding property jointly can produce some unfortunate consequences. That being stated, holding property jointly can also be a useful planning tool in the context of your entire Estate Plan. If you would like to explore this topic further, please give us a call at (203) 651-5521 or use our online contact form HERE.