Clients often ask if joint ownership of property or a bank account is an effective and economical way to pass property to their heirs after they pass on. Joint ownership avoids probate because the property passes by operation of law to the surviving joint owner. A recent article in Forbes outlines some of the problems that can arise with this strategy. Among them:
- Joint tenancy of a bank or financial account facilitates embezzlement.
- Once a person’s name is added to the title of property, it can be undone only with his or her consent.
- Property held in joint tenancy is immediately subject to claims of each joint tenant’s creditors.
- Joint tenancy can produce unintended results.
A much better way to avoid probate is to execute a Revocable Living Trust. During the life of the Grantor, property or accounts held in the trust are treated just as if they were held individually, but they avoid probate because the trustee administers the distribution rather than the court. It is quick, private and much cheaper than probate. It also avoids the potential risks of joint ownership.