Joint Ownership & POD’s Are Not An Estate Plan


You've heard that adding a Joint Owner or Pay On Death designation to your bank account is much easier than creating an Estate Plan. Right...and wrong. There are several reasons that "planning" this way can cause trouble. Here are a few ways issues can arise.


Nothing Left To Pay Your Final Expenses

Your estate is responsible for payment of your final expenses. This can include medical bills, funeral expenses, burial / cremation costs, etc. 

With Joint Ownership or Pay On Death ("POD") accounts, your assets with transfer immediately as the time of your death by operation of law. If all of your assets are then out of your estate, nothing is left to pay your final expenses.

Your Joint Owner May No Follow Your Wishes

You think that you have found a trust person to add as a joint owner of your accounts. You've made an agreement with them that when you pass they will split everything up between your children.

This is a twofold issue:

  1. That trusted person might decide to keep everything for themselves. Or maybe not everything, but they may decide they are owed a "finders fee."
  2. That trusted person, even if they wanted to, may not be able to disburse everything that you have left. If the amount they need to give to your children is more than the annual gift exclusion amount they would either have to do the gifting over more than one year, or would have to deal with gift tax issues.  

Adding Joint Owners Could Cause Gift Tax Issues For You

Adding anyone as a joint owner of an account or other property could trigger gift taxes for you. 

For instance, if you added your child as a joint owner of your $500,000.00, that could be considered a $250,000.00 gift. A $250,000.00 gift is a taxable event that you would have to address.

If you'd like to learn more about Joint Ownership and POD's or have any other Estate Planning questions, please schedule a complimentary Estate Planning Strategy Session.

About the Author Donald Rolfe

Father, husband, entrepreneur, and owner of a trivia filled brain. I help families and individuals plan for the unexpected and end of life. Schedule a Complimentary Strategy Session to chat with me, get answers to your questions, and find out about your Estate Plan options.

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