THE CONSEQUENCES OF ‘SIMPLE CONVENIENCE’
RECENTLY, A CLIENT ASKED ME TO REVIEW HER WILL to make sure that her two children would inherit equally from her estate. She has two children: Jim, who lives locally and is the “go-to” person when she needs help; and Susan, who lives out of the area.
When I reviewed my client’s assets, I found that she had added Jim as a joint owner on all of her accounts—just for “convenience,” so he would have access to her money should she need it in an emergency. What she didn’t realize is that Jim would automatically inherit all of her assets, despite what her will stated.
Unfortunately, I see this kind of thing all the time. People take steps to simplify their assets or their estate, only to in advertently change their testamentary. When this happens, one child may inherit substantially more than another, or a child can be left out of their inheritance entirely. Either way, it’s not what you intended—and it can lead to bitter family fighting and damaged relationships.
Many people title their homes, bank accounts and other assets jointly with another person for convenience or to ensure quick access. This simple set-up also allows a surviving spouse, child or other beneficiary to inherit assets without the probate of a will. But be aware that the person named on that account will automatically inherit the whole account–even if a will says otherwise. The same is true for Totten Trust accounts—that is, accounts where an individual specifies that the account is “In Trust For” (ITF) a particular person. The beneficiary named on that account will inherit those assets, regardless of what the will states. There may even be tax disadvantages for the parent, as well as the child, in this set-up.
How to avoid this serious mishap: Review the title to all your bank accounts, stock certificates, retirement assets, insurance policies and the deed to your home. Execute a Power of Attorney to provide someone you trust with access to your assets—instead of naming them on your accounts.
Jennifer B. Cona is the managing partner of the Melville, N.Y.-based law firm Genser Dubow Genser & Cona LLP and director of the firm’s Elder Law department. She serves on the Executive Committee of the Board of Trustees of the Long Island Alzheimer’s Foundation and the advisory board of the Legacy of Love, an organization dedicated to life planning for children with autism. A frequent lecturer and media guest, Jennifer also has been featured in many publications, including The New York Times, The Wall Street Journal, and Kiplinger’s. Contact: firstname.lastname@example.org
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