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Last Updated on October 29, 2022 by Estate Planning FAQ

Generally speaking, accounts and assets that are titled as joint tenants with rights of survivorship (JTWROS) and not as tenants-in-common will pass the asset to the other named person or persons, if there are more than one, at the death of one of the owners. Upon presentation of a death certificate, or sometimes even only an obituary, the company where the account is located will then have the property owned by the surviving names.

A Word of Caution

Although this is a valid form of estate planning to pass assets to someone to avoid the probate process, and there are reasons that they should be looked at cautiously and only to make certain that it fits within a plan and the owner knows the consequences.

It should be noted that the individuals listed with the owner as joint owners are owners of the property with the reader effective upon their names being added. What this means is that not only the reader but any of the other owners may withdraw a portion or all of the property. For example, if a parent lists a child on a checking account as joint owners with rights of survivorship, the child can withdraw all of the funds in the account, even if the parent needed the funds to live on. Although there are some arguments to be made regarding “contribution” this is usually a later argument only after the funds have been removed.

4 Additional Examples of Why Not to List a Joint Owner

A. If a joint owner is going through a divorce, it is possible that their rights to the funds could be considered a marital asset and have to be used to pay a a soon-to-be ex-son or daughter-in-law. This may depend on the state that the reader lives in and what the domestic laws are in that jurisdiction. However, as a general rule, a joint owner is the owner of the account and at least an argument could be made.

B. If a joint owner has creditor issues and should be sued, any amounts in the joint account could possibly be seized by the judgment creditor to satisfy the outstanding judgment amount. A creditor doesn’t typically care whose money it is, if the joint owner has access to it, there is a strong argument that it may have to be used for the satisfy any judgment amounts.

C. A situation worse than a judgment creditor, if a joint owner has outstanding federal taxes that are owed to the Internal Revenue Service, the IRS may be allowed to seize and garnish bank accounts without first getting a court order. In this situation, the Internal Revenue Service could seize the entire balance of the account and it would be up to the other joint owners to argue that it should not be seized. However at that point in time, the money is usually frozen to then sort out you may be entitled to what.

D. A joint owner who may become involved in a vehicle accident in which it it was their fault could also have their interest in the account seized to satisfy any amounts that may be owed as a result of an automobile accident.

Simple Doesn’t Mean Secure

Although joint ownership avoids probate and seems like an easy and convenient way to pass assets at the death of the owner of the account, as set forth above, there are a number of reasons that the reader should proceed cautiously. Just because the reader may save a few dollars for their estate plan adding joint owners, the potential adverse consequences are much greater than spending a bit to protect the reader not only while they are alive but also to then pass the property after they have died.