estate planning joint bank account

Joint Accounts Cause Estate Planning Problems

Setting up a joint account at your local bank is a quick and easy process. They are so easy to create that few people appreciate how completely they can destroy a carefully crafted estate plan. The Palmer & Slay, PLLC team wants everyone in the Brandon, Mississippi area and beyond to be aware of the huge impact a joint account can have on their estate plan. 

What Are Joint Accounts?

Joint accounts are banking or investment accounts that two or more own together. The boilerplate language that banks include on the forms people fill out to start up these accounts typically indicates that the account owners all have equal rights to the assets in the account and the right of survivorship. 

Having equal control of the account is the benefit most people are seeking when they set up these accounts. Joint accounts are a great way to ensure that spouses can pay their household bills by pooling their resources. These accounts are also a great tool for people who are assisting an older relative with their financial affairs.

The right of survivorship is a less well-known, and often misunderstood, characteristic of most joint accounts. Opening a joint account with a right of survivorship means the account holder that lives the longest ends up with complete ownership of the account. 

Estate Planning Problems 

Having one joint account owner end up with complete ownership and control of the account may not be a big deal, but in some situations, it completely wrecks an account owner’s careful estate planning. 

There is no way for the estate of a deceased joint account holder to make a claim for funds held in a joint account with the right of survivorship. The moment the first account holder dies, the entire account belongs to the second account owner. This can cause problems if the deceased account holder has heirs they wanted to compensate who were not fellow account holders. 

For example, a woman named Jane has four children, Ann, Bert, Candace, and Dan. Dan is an accountant, so he helps his mother keep her finances in order when her health starts to decline. To make it easier for Dan to help pay various bills, he is added as a joint account holder on all of Jane’s bank accounts. 

When Jane dies, all the money in her joint bank accounts becomes the sole property of Dan. It doesn’t matter that all four kids were originally listed as POD beneficiaries on the account, or that Jane’s will says all of her assets are to be divided equally between her four children. 

Dan does not have to honor his mother’s wishes and divide up the money in the accounts since he is now the sole owner of them. The money is now his because of the right of survivorship. 

Under Mississippi law, Ann, Bert, and Candace can try to sue Dan to get the money in the joint account equally distributed, but it often takes more time and money to resolve such a dispute than it is worth. It is also difficult to prove their mother’s intent was to have the assets in the joint account split up when she signed bank paperwork giving Dan the right of survivorship when the accounts were opened. 

Preserving Your Wealth. Protecting Your Loved Ones. 

When the Palmer & Slay team sets up an estate plan for a new Brandon, Mississippi area client we carefully review all of their existing accounts to determine exactly how they will pass at the time of death. We also encourage anyone we have worked with in the past to regularly schedule a check-in with us to make sure their estate plan still works well considering their current mix of assets and family relationships. Whether you need a plan created from scratch, or just want to make sure you are still on track, contact our experienced team of estate planning attorneys today to schedule a consultation.