What is Joint Tenants With Right of Survivorship (JTWROS)
JTWROS is a common way for people to hold title to property or other assets. The account or property is owned by two or more people with equal shares. When one of the owners dies, the other owner(s) automatically inherits the account or property without probate. Sometimes this is an appropriate way to hold title, but it also can be very dangerous. The dangers in holding title to property as JTWROS is that it bypasses what the deceased has stated in their Will or Trust. JTWROS trumps a Will or a Trust. This may NOT be what is intended.
Disinheriting a loved one
For example, let's say a single woman has two adult children, and her Will says that she wants all of her assets to be divided equally between her two children. Most of her assets are titled only in her name, but she has a few CDs titled with her oldest child as JTWROS. Her rationale is that in case of an emergency the daughter on the account would have access. The woman passes away and the CDs automatically and legally go only to her oldest child. This is not what she intended.
Protecting assets from long term care and nursing home costs
For example, a husband designs his Last Will & Testament to leave assets to his wife in a testamentary special needs trust, protected from long term care and nursing home costs. However, they continue to hold title to all assets as JTWROS. The husband passes away and the wife automatically inherits the joint assets loading the wife's estate. Because the husbands assets never passed through the special needs/long term care protection provisions within the Will, all of the husbands assets could be exposed to being cannibalized by the wife's long term care and nursing home costs. Again, because JTWROS trumps a Will or Trust, the way they held title destroyed their estate plan.
Some people want to avoid probate so they add their loved ones to their accounts as JTWROS. What if your daughter is on your account and she runs a stop sign and hits a school bus. She's a co-owner of the account so your assets are now exposed to of the lawsuit. What if your son's name is on your account and he gets a divorce? Do you think his soon to be ex-wife would make a claim of your account as being part of their marital assets?
Some options to avoid making mistakes
Some options to avoid these mistakes would be to establish a Will or a Trust, and to hold title and beneficiary designations in such a way that the assets actually pass through the provisions you took the time to create. Also, if you want someone to have access to your assets if you are incapacitated, you don't need to add their names to the title. You could create a Property or Financial Power of Attorney and name that person as your agent in the event you are incapacitated. An attorney who focuses their practice in estate planning can save you from making costly mistakes and can help you find a solution that fits your needs.
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