People sometimes take on do-it-yourself projects to save money. Unfortunately, in some cases these efforts wind up costing more money in the long run. This certainly comes into play when you’re talking about estate planning.
There are certain simple steps that you can take to arrange for the transfer of assets to others. Joint ownership is one of them.
Sometimes called the “poor man’s estate plan” with joint ownership you simply add another person as a co-owner of your property. This could be your home, your bank accounts, and your brokerage accounts.
When you die there is just one owner left, and this person would still own the property after you die. This is the long and short of it.
The truth is that this poor man’s estate plan can actually make you poorer.
What happens if the co-owner decides to utilize the funds for his or her own purposes? The answer is that you can do nothing about it because this person owns these resources just as much as you do.
What if someone sues the co-owner? While you are still alive you may watch much of it go down the drain if the co-owner is the target of a lawsuit or if he or she is involved in a messy divorce. Creditors of the co-owner could also target these funds.
What if you tell the co-owner to distribute the money among family members and he or she doesn’t do it? Once again, there is nothing to stop the remaining owner from doing anything he or she wants to do with the money.
When you consider how easy it is to plan your estate properly with the benefit of legal counsel buying into risky notions like joint ownership is probably not a good idea.