Joint Bank Accounts: Worth the Gamble?

You can cross your fingers and hope for the best while taking some estate planning steps that are questionable. But you have to ask yourself if it is really worth the gamble — one of the these questionable steps is joint bank accounts with children.

It took a lot of time and effort to accumulate the resources that comprise your estate and you would probably do well to make a small investment into a properly constructed estate plan rather than seeking out do-it-yourself alternatives.

There are some people who have decided to add a family member to a joint bank account or multiple joint accounts. They simply instruct their co-account holder on how they want the funds in the account distributed after their passing. The assumption is that this person will act as an executor of sorts and it is really no different than executing a last will.

Actually, it is a whole lot different. While it is true that the executor or personal representative will prepare the assets for distribution, it is done under the supervision of the probate court so there is oversight.

And, the assets remain in your sole possession throughout your life when you use a last will (or a trust) and eschew the idea of a joint account. This is a very important consideration.

Nobody wants to hear this, but the cold hard truth is that your co-account holder could abscond with the funds. We all know that trust is sometimes violated and the victims never thought it would happen to them.

Another thing to consider is the possibility of the co-account holder being targeted by creditors or claimants. He or she owns your funds just as much as you do and they could be attached.

The co-account holder could suffer negative consequences as well. What if he or she was trying to qualify for Medicaid as a way to pay for long-term care? These resources would count toward his or her upper resource limit.

Given that, a joint account is often not a good estate planning solution. There is no reason to take any chances when a properly constructed estate plan is within reach of anyone who has the means to leave anything behind in the first-place.