Make Things Simple, But Do It Right


Kitchen Tune-Up

As an estate attorney, I often consult with families who have executed what is commonly referred to as a “lazy man’s will.” That is, they designate a “survivor owner” in their title documents such as deeds, CDs, and bank accounts. When one of the owners passes away, the other owner (survivor) automatically has full and total rights in the asset to sell, spend, or do whatever they want to with it. This happens without any kind of court proceeding, including probate. This sounds simple enough.


This arrangement is referred to as JTWROS, which simply means “Joint Tenancy with Rights of Survivorship.” The designation is common between spouses for homestead property, investment accounts, CDs, and similar financial instruments. It is quite clear that when the first of two joint owners passes away the other joint owner has, as stated above, the right to do with the property as he or she sees fit. While it sounds like a suitable solution, in reality, it can turn into a problem.


For example, if a spouse, as joint owner, becomes incapacitated and requires extended care, the other spouse will likely have a problem disposing of the asset or borrowing money against it unless other effective arrangements have been made. Some people elect to have a living trust through which they own their assets in order to solve the joint ownership incapacity dilemma.


Sometimes parents name children as “survivor owners” on assets such as their home, bank accounts, and so forth. The effect at death is just as stated earlier. The asset goes to the other owner(s), but there is an additional wrinkle that parents don’t often consider: If your child, as a joint owner, should be sued and a judgment obtained against the joint owner, then your property (or a portion) could be seized by the creditor as the child’s asset. Many people protest, saying, “But that’s my money,” or “That’s my property” and it sounds very logical. The problem is that when you put the child’s name on an asset, the asset stopped being yours exclusively. Instead, the child has an actual ownership interest, and their creditors can reach it.


What kind of creditors? It could be their divorce, bankruptcy, a lawsuit as a result of a car wreck, or any of a number of other situations that cause the assets of the child to be placed at risk (and some of those may be your assets, too).


There’s another situation to avoid. Many older people put a child on their bank account with the idea that, in case the parent becomes ill and can’t act for him or herself, the child will pay bills for them. Let’s say the parent has three children and wants to divide the bank account and all other assets equally among the three, and that’s what they have written in their will. However, the will only controls property that goes through probate. A bank account with one child’s name on it as a joint owner will cause that child to be a co-owner, and the child will own the entire bank account when you pass away to the total exclusion of his or her siblings. It doesn’t matter what your will says.


Many people are unaware of this development and without proper planning can make sizeable mistakes in titling assets. Their original intent can be substantially frustrated after they have passed away.


These and other complications are easy to avoid. All it takes is a little estate planning and an understanding of the consequences of your choices. Many people with good intentions often create their own legal problems. Most often a living trust is used to avoid these outcomes. Get some good advice. Solve these issues before they become real problems. Make things simple. It’s truly a loving thing to do.




Elizabeth Wynn is a member of the National Academy of Elder Law Attorneys and practices law in Ridgeland. She and her family live in Madison.

Pro-Life Mississippi