By: Jeffrey P. Roth
With the expiration of the Ohio Estate Tax, our goal is to transfer property to the spouse or the next generation without going to probate court. There are many ways to title property to accomplish this goal. Creating a joint and survivorship bank account will insure that the account will pass on death to the survivor owner of the account. This sounds great but this may not always accomplish the wishes of a decedent.
Mom has three children. Mary, the daughter, helps mom with her day to day bills. Mom adds her daughter to her account with a “joint and survivorship notation.” While she is at the bank, they suggest that she add the designation to all of her accounts and certificate of deposits. Here are a few problems that can arise.
- At mom’s death, all of the accounts will pass solely to the daughter. The daughter promises to pay the other kids but no one can force her to do so. If she does divide the funds with her siblings, she has made a gift to each of them which could be subject to a gift tax return.
- The daughter gets a divorce or has financial problems. This account also belongs to the daughter one hundred per cent and is subject to the debts of the daughter and is an asset in her divorce settlement.
- This is a second marriage. Each spouse placed money into the account but the husband was never on the account. When mom dies, all of the funds go to his step-daughter and on to her family leaving his family out of the picture.
- The granddaughter is applying for college loans. The institution will include this account in her mother’s asset list and this fact may prevent the granddaughter from getting financial assistance.
- One purpose of the account was to pay for the funeral and all other death related expenses. There is nothing to require the daughter to use the funds for the payment of these expenses.
There are times that a single person will add the name of a friend or neighbor to help her with her finances. Remember that at her death the funds will immediately belong to the neighbor without question and the neighbor has no duty to pay the bills or return the money.
I recently had a case where the lady placed her sister on the account as joint with right of survivor many years before. She never retitled the account when her sister went on Medicaid. When the lady died, the account was the property of the sister who was now on Medicaid and all of the funds went to the nursing home.
This method is a great way to transfer monies at death but you need to be sure that you have the right people on the account. Remember that if the other person would predecease you then the account is in your sole name and we are back in probate court. You should have someone review all of you accounts and how they are titled to insure that there will be no unintended consequences.
Jeff Roth is a partner with David Bacon and associate Jessica Moon of the firm ROTH and BACON with offices in Port Clinton, Upper Sandusky, Marion, Ohio and Fort Myers, Florida. All members of the firm are licensed in Ohio and Florida. Mr. Roth’s practice is limited to wealth strategy planning and elder law in both states. Nothing in this article is intended for, nor should be relied upon as individual legal advice. The purpose of this article is to provide information to the public on concepts of law as they pertain to estate and business planning. Jeff Roth can be reached at firstname.lastname@example.org (telephone: 419-732-9994) copyright Jeffrey P. Roth 2013.