On December 18, 2012

If you’re one of the many Colorado residents who have taken steps toward planning their estate, congratulations. Preparing for the time when your assets and property will be passed down to your loved ones is important, regardless of what stage of life you’re currently in or the size of your estate.

While in the process of planning for your future, you or your relatives may be unsure about the best ways to avoid problems that come up when it’s time to administer an estate. Many people assume, for example, that it’s best to avoid the probate process at all costs. But there are more troubling scenarios the average lay person might encounter than probate.

Consider bank accounts for example. If you’re elderly and want to want to avoid probate issues when your estate is distributed, you might have considered setting up joint tenancy of a bank account with a trustworthy son or daughter. Opting for joint tenancy with right of survivorship means that after you die, the joint account holder will take full ownership of the account without the funds going through probate.

This method could work for you if you have no plans to leave the money in the account to anyone else but your joint tenant. But if your intention is to distribute the money in your account to more than that person — say, the rest of your children — this plan may not be ideal. That’s because the joint tenant has no legal obligation to share the funds with anyone else. Even if you’re absolutely certain that your child or other relative will share the funds based on your wishes, his or her financial circumstances could change. A bankruptcy or other credit problem, for example, could eliminate the funds in the account. If the account is in your name only, you can at least specify your plans for the funds in your will, ensuring that they’re distributed according to your wishes.

This is just one example of the complexities that many people may not consider when planning their estate. While planning your estate is a good step to take, it pays to seek some professional assistance when it comes to hammering out the finer points.

Source: Gazette.com, “Money & the Law: Joint tenancy can have unexpected consequences,” Jim Flynn, Dec. 16, 2012

Categories: Estate Planning

Tags: , , , ,