Hazards of Joint Ownership of Bank Accounts

What not to do:

1.         Do not put a neighbor or a friend on your Joint Account.  The new joint owner can withdraw 100% of the money in the bank account without your knowledge and approval.

2.         Banks and other creditors can garnish all money in the account for the debt of any of the joint owners, even if the money in the account does not belong to the joint owner.  And the

garnishment from the creditor can be done without the owner knowing first.

3.         Transfers out of a joint account could be construed as a gift and then, unintentionally, make you ineligible for Medicaid benefits.

 

What to do:

A.        Make sure that you unquestionably trust the person/child/relative whose name you add to the bank account or investment account.

B.        Make sure that you know that the person to be your new joint owner does not have any judgments against them, is current in their own mortgage payments, does not owe any State or Federal income taxes, or is not liable for unpaid withholding taxes, and is current in their child support and/or alimony obligations.

C.        Make appropriate use of a power of attorney.  A power of attorney can be withdrawn at anytime.   That keeps control of your assets within your control.

 

Call  248.643.9530 or email info@zeiglerlaw.com for a consultation.

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How do you avoid Probate?

1.          Be sure to have all of your assets in a revocable trust. This means that your back account and brokerage CD monthly statement registration statement says: Mrs. XYZ Revocable Living Trust. How-to-avoid-probate-taxes/funding-your-trust. Most of the time, this does not happen, but titling assets in this correct manner is what a properly funded trust looks like. http://zeiglerlaw.com/wills-trusts-probate/estate-planning-documents

2.         There is a second way to avoid probate – and that is to have everything you own in joint ownership with the right of survivorship (JTWROS). This works to avoid probate, but creates a lot of other (avoidable) problems. For example, joint ownership does allow all of the other joint owners complete power over all of the values in the joint accounts – even though the one joint owner did not contribute one nickel to creation of the values in the joint accounts.

True Story: Our Michigan elderly widow added her adult daughter to her own bank account, JTWROS, on a Friday. The plan was to avoid probate. When the widow went to withdraw her money the next Tuesday to pay for the needed medical treatment, her money was gone. Seems the daughter had a Florida judgement against her from a Florida bank, and the bank had successfully garnished all of the Mom’s bank account to satisfy the daughter’s debt, and the Mom was unable to get her medical treatment.

There are other ways to avoid probate that can be explored more thoroughly in a consultation.

Call  248.643.9530 or email info@zeiglerlaw.com for a consultation.