Simply adding someone to your bank account or accounts and assuming that you suddenly have an effective estate plan in place is a mistake. Most people would probably recognize this right away, but you may be surprised at the number of people who are under the impression that this is a viable solution. Owning an asset jointly is a method of holding title.? It is not an estate plan.
In fairness I guess there could be very rare circumstances where joint ownership might operate as an estate plan substitute.? Again, it would be rare.? And, if you dig a little bit deeper there are some definite pitfalls that make this a bad idea for everyone who may be involved.
If someone said that they wanted to leave you money after they pass away you may have no objections. Let?s say that this individual tells you that he or she is going to make you the co-owner of a joint account.
At some point in time you need long-term care, and given the exorbitant prices you endeavor to qualify for Medicaid to pay for residence in a nursing home or assisted living community. Medicaid is going to analyze your financial situation to determine your eligibility.
The resources that are in this joint account are yours in the eyes of Medicaid. Given the fact that the upper financial resource limit is just $2000 this could preclude you from eligibility.
On the other side of the coin, if you are the person who put the money into the account, creditors or claimants who seek to attack the resources of the other account holder could go after your funds.
Those who rely on overly simplistic actions often regret it. The wise course of action is to simply work with a good inheritance planning lawyer when you are making plans for the future.
Larry Parman
Author, President and Founding Attorney
Parman & Easterday
Parman & Easterday are members of the American Academy of Estate Planning Attorneys.
Source: http://www.parmanlaw.com/blog/estate-planning/wrong-joint-accounts/
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