It seems to be practical – opening a bank account as “joint tenants with rights of survivorship” with a spouse – but did you know that holding a joint account impacts your family when you pass away? The ‘ownership’ of the account determines what happens to the account upon the death of one owner.
For example: If a husband has a credit card solely in his name and passes away, the account is settled during probate, which is the legal process that administers an estate. The debt is either paid off, or in the case where an estate does not have enough money to pay all of the bills, is not paid in full, but normally the credit card company could not then go after family members for the debt.
On the other hand, if that credit card account was a joint account with both the husband and wife listed, the bills could then become the responsibility of the wife should the husband pass away. This is not only the case for the ‘debt’ accounts, such as credit cards and loans, but the ‘asset’ accounts, such as stocks, savings accounts and more. In that case, joint ownership can be a helpful estate planning tool to allow these accounts to avoid probate.
It’s important to realize that how your accounts are set up, even how your home is owned, impacts your future and your family’s future when you pass away. Working with an estate attorney will give you and your family an overview of how well you’re prepared for the host of issues you will face if one of you dies suddenly. Debt is only one piece of that puzzle.