New York Estate Planning & Elder Law Blog
If you’ve been asked to help a loved one manage their assets, you likely know that there are many complex issues to consider. One question that many people in this situation are often left wondering is whether it is better to be added to a bank account as a joint account holder or if it is better to establish a separate estate account. While it can be quicker and often easier to simply add a person as a joint account holder, the joint account will also be left the sole account holder after the loved one’s death.
The alternative is to open an estate account which will be responsible for paying bills associated with the deceased person’s estate. This article reviews just some of the most substantial advantages that people realize by opening estate accounts.
# 1 – Reduced Risk Exists with Estate Accounts
As a joint account holder, a person has complete access to the funds of a loved one. There are unfortunately not any limitations on how the person uses the funds. While many children who help parents manage estates are capable of being trusted, there are cases of children abusing this power. Not to mention, in joint accounts, the child’s creditors would be able to seize any assets located in the joint account. Furthermore, assets in a joint account could prevent a child from qualifying for government assistance. Utilizing an estate account means that creditors will not be able to seize assets in the account. Additionally, assets in an estate account will not prevent a child from qualifying for government assistance. Estate accounts are the safest method available for all of the parties that are involved.
# 2 – More Equal Results
Most parents want their assets to ultimately be evenly divided before being transferred to children. Because there’s an increased risk in joint accounts, there is also an increased risk that the child who is named as the joint account holder might end up receiving more than the other children. While there are cases where parents decide to open joint accounts for each child, this is a time consuming and complex process. Instead, the safest way to make sure that multiple children receive even results is to leave all of the parent’s assets as part of the estate until after the parent passes away.
# 3 – Estate Accounts Avoid Unexpected Results
Joint accounts can result in particularly undesirable results if unanticipated events occur. Consequently, only a small amount of the estate’s assets might ultimately pass on to beneficiaries. For example, if a joint account owner dies unexpectedly without adequate estate planning, the assets in the account could be used to pay off this person’s debts and never actually pass to beneficiaries. By preserving the assets in an estate account, it is possible to greatly reduce the risk of these unforeseen complications.
Speak with an Experienced Estate Planning Lawyer
Opening an estate account is a quick and affordable option for people who are tasked with co-managing a loved one’s estate. While it’s often tempting to continue using a joint account, opening an estate account can provide some substantial advantages. For assistance with this issue or any of the other nuances involved with estate planning, one of the best steps you can take is to speak with an experienced estate planning lawyer. Contact Ettinger Estate Planning today to schedule a free case evaluation.