Is it good to have joint accounts with rights of survivorship?

Q: Is it good to hold my assets in joint accounts with rights of survivorship?

A: If you want the joint owner to have the property after your death without going through probate, a joint account will accomplish that. However, joint ownership can complicate matters in the estate planning context in ways that you may not have considered. 

You can unwittingly undermine an “equal shares” estate plan. If you have planned for your estate to go equally to your children or other beneficiaries under your Will, the jointly owned property or account will have the effect of delivering a share of your estate to the joint owner. This may make the “equal shares” unequal and your other beneficiaries unhappy.
You can unknowingly make a gift that incurs gift tax. For example, if you add a child’s name to a real property deed as a joint owner with rights of survivorship, you have just made a gift to that joint owner. The value of the real property determines the value of the gift. If the value of the gift exceeds $13,000 (the annual gift tax exclusion amount for an individual in 2010), you should file a Tennessee gift tax return and a federal gift tax return. Sometimes gifts are not discovered until after a joint owner passes away. By that time, there may also be penalties and interest owed in addition to the gift tax.

You can unknowingly render your estate planning documents worthless. The property that passes under a Will is the property that is titled in the name of the deceased person alone and that comes to the estate by a beneficiary designation. Planning to minimize estate and inheritance tax often involves the use of trusts created after death with the property passing under the Will. If the deceased person owned all his property jointly with his surviving spouse, the trusts created under the Will cannot be funded and the couple will not get the benefit of the tax planning in the Wills.

Joint ownership may not be what you intend. Sometimes an older person wants to add a child or friend to a bank account so that person can help them pay bills. The best way to do this is by making that person an “authorized signer” on the account and not a joint owner of the account. Often this distinction is not clearly understood or communicated to bank personnel and an account that should have had an authorized signer added, becomes a joint account instead. This can lead to problems later on when the older person dies and a person who was never intended as a beneficiary becomes the owner of the joint account.

Joint accounts can be a convenient way to own property. Just make sure you understand all the consequences of this form of ownership in the estate planning context.


  1. […] who gets the property when the owner dies. Property that is owned by two or more people with joint rights of survivorship or by husband and wife will pass automatically at the death of one owner to the surviving owner. […]

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