Your Will Versus Account Ownership
Jan 12 2009
I was recently asked to help an elderly couple find an estate planning attorney and to accompany them to the meeting to draw up the Will. I did some checking around and found someone who could help them. Their estate was relatively simple and they wanted to leave everything to each other and then when the second spouse passed away to distribute the estate to their children and grandchildren. The attorney drew up the Will and the couple signed it. Not that different from what many of us would do.
I asked the couple if I could look through their assets to make sure everything was o.k. This is when I discovered they had a potential problem. Even though they intended to leave everything to each other, their liquid assets (bank savings accounts and US Savings bonds) which were the majority of their non-real estate portion of their estate were held in joint tenancy with one spouse and one of their children. For example, one savings account was a joint account with husband/father and son. The couple did this so that the son could access the money if the husband was incapacitated. However, this arrangement did not meet the couple’s goal to leave everything to each other. Assets held in joint tenancy do not transfer in accordance with the Will, but become the property of the joint tenant. This would mean that the surviving spouse (wife) would not inherit the funds but the joint tenant (in the example above the son) would. This could put the surviving spouse (wife) in a difficult financial situation. I immediately notified them of my concern and they started to rectify the problem.
Unfortunately, the husband died before all the assets could be re-titled. The good news is that the children were informed of the intent of the couple and they are supporting that intent by a gifting program back to the surviving spouse, so in this case it turned out o.k.
There is a lesson here for all of us. Check how your assets are titled and make sure that your Will and titling plan complement each other. Remember, your Will only disposes of assets that you “control” such as those owned “fee simple” (like a car titled in your name only) or tenancy in common (similar to a partnership where you control your portion of the asset). If joint accounts or joint tenancy with right of survivorship (JTWROS) assets are shared with someone other than who you want to inherit the asset it is time to take action to change the account ownership arrangement.
