Pay-on-Death, Joint Tenancy, and Beneficiary Designations

  • Pay-on-Death, Joint Tenancy, and Beneficiary Designations

    Did you know that assets you place in joint tenancy, or name a beneficiary for, are not subject to your Will?  In some circumstances, using these methods to get property to someone is appropriate; but many times, it can mess up a carefully executed and balanced estate plan.  Joint bank accounts are equally available to you and the other owner.  If the other owner gets into trouble, he can empty the account.  And many people are talked into Pay-on-Death account designations by well-meaning bankers in order to bypass the FDIC limits, only to unwittingly cause an inequality in what goes to their children.  Also, by adding someone as a joint owner to an existing account or asset, you have made a gift of 50% of the value of that asset.  This is especially true with real property.  If the value of the gifted property exceeds the annual limit, a gift tax return must be filed.  When you are creating your estate plan, tell your attorney how your assets are titled/owned, and which ones have a beneficiary named and who it is.  Your attorney is not being nosy, but needs this information to create an effective plan for you.  And once one is created, do not change ownership of your assets without consulting your attorney.

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