Why avoid joint ownership when planning for incapacity?

On Behalf of | Jul 13, 2021 | Estate planning

When preparing for what happens with your Wisconsin estate in the future, you have to consider many factors. One of them may be your potential incapacity and, therefore, inability to make decisions on your finances. You can name a close family member, usually a child, as the person who can make those decisions on your behalf. If you have more than one child, you might even consider joint ownership.

Why should you avoid joint ownership when preparing for incapacity?

While it may seem like a fairer solution to name more than one person during estate planning, it can cause problems. There are good reasons to avoid joint ownership when you plan for your potential incapacity. They include the following:

• Upon the death of one of the joint owners, the surviving owner automatically inherits the remainder of the bank account. This stands regardless of what you put in your will during estate planning. It’s a bad idea as it would exclude anyone else you have named in your will.
• If there is a poor judgment, joint ownership cannot protect against it. For example, if one of the owners is fooled by a scam and drains the bank account, the other owner can’t do anything about it. Another common scenario is that one of the joint owners may be foolish with money and spend the funds in the account improperly.
• The creditors of either owner can gain access to the account. This is an even bigger possibility if one or both of the joint owners have significant credit card debt.

The best thing you can do to prevent these issues from arising is to set up automatic deposit of investment income and Social Security checks. You will also want to set up automatic payments for utility bills. If you do choose joint ownership, keep the amount of funds in the account to a minimum.

Who can help you?

An attorney can help you when you want to plan your estate. Your wishes will be honored and you can rest easy knowing your estate will be in good hands.