Joint Bank Accounts & Other Property Transfers To Survivors – Part 2
[See our Disclaimers page about relying on this website’s contents.]
This article concludes a two-part series of about joint bank accounts and other kinds of asset co-ownership (click here to read Part 1).
Joint Accounts – Name Sequence
Some people mistakenly think that it makes a difference whether someone’s name appears first or second on a joint account. It is common for a financial institution to use the Social Security number of the first listed account owner as the accounts tax identification number, but the name sequence is meaningless otherwise.
“And/Or”
Also, we still see the “and/or” notation on some bank accounts. We think banks or other institutions developed this notation as a shortcut for joint account pre-printed account forms that lacked enough space to identify accounts correctly. The notation confuses people about whether the account is a tenancy in common (TIC) or a joint tenancy with rights of survivorship (JTEN), so we discourage everyone from using that designation.
Be Careful With Multi-Party Accounts.
Multi-party accounts (co-tenancy accounts) are simple estate planning devices that people can establish without complex wills or trusts. People often mess up their estate plans, however, by adding one of their children’s names on accounts so that the younger person can pay bills during the parents’ illness or after the parents’ deaths. Unfortunately, as Part 1 of this series explained, Indiana law presumes that multiple names appear together in account ownership records, the people share ownership as joint tenants with rights of survivorship (JTEN). Ownership of the joint tenancy account will pass to the surviving cotenant regardless of whether the deceased tenant’s last will and testament specifies distribution to all of the children.
If you insist on adding someone’s name to account for convenience bill payment, avoid the survivorship problem by asking the bank to designate the other person as an agent. Preferably, make a power of attorney that authorizes someone to pay your bills if you become disabled and designate someone in your will as the personal representative (sometimes called and “executor”) of your estate after your death. If other estate planning objectives justify creating a revocable trust, you can also open accounts to be owned by the trust and designate successor trustees to take over for you after your death or if you should become disabled.
Estate Planning with Co-ownership
People often ask us to “put the children on the deed to keep the nursing home from getting it.” It is possible in a small percentage of cases to protect real estate from nursing home expenses by creating co-ownership, but Medicaid (the government program that pays nursing home bills for patients that cannot pay) disqualifies most people for creating co-ownership. Alternatively, joint bank and investment do not trigger Medicaid disqualification, but Medicaid considers the full value of such accounts to belong to the nursing home resident unless the other co-tenants can prove that they deposited their own money in the accounts.
We use all kinds of co-ownership systems as estate planning tools, selecting one system or another like a mechanic selects the best tool for a particular job. Using co-ownership for estate planning without reputable legal advice is a lot like performing surgery on yourself with pliers and steak knives – you may fix part of your problem, but you may bleed to death in the attempt.
We encourage readers to ask questions or suggest ideas for other topics by posting comments on our blog on this website or on our Facebook page, tweeting to Jeff Hawkins on Twitter (@HawkinsLawPC) or calling Hawkins Law PC at 812-268-8777.
Jeff R. Hawkins and Jennifer J. Hawkins are Trust & Estate Specialty Board Certified Indiana Trust & Estate Lawyers and active members of the Indiana State Bar Association and National Academy of Elder Law Attorneys. Both lawyers are admitted to practice law in Indiana, and Jeff Hawkins is admitted to practice law in Illinois. Jeff is also a registered civil mediator, a Fellow of the American College of Trust and Estate Counsel and the Indiana Bar Foundation; a member of the Illinois State Bar Association and the Indiana Association of Mediators; and he was the 2014-15 President of the Indiana State Bar Association.
Find more information about these and other topics at www.HawkinsLaw.com, add us to your Google+ circles, like us on Facebook, follow us on Twitter @HawkinsLawPC or call us at 812-268-8777. © Copyright 2015 Hawkins Law PC. All rights reserved.
