Your Joint Accounts and Estate Tax Planning

Joint accounts are a popular estate planning option because they can allow for the quick transfer of assets after the death of one or more of the joint owners. Depending on the type of asset and the form of joint ownership, the surviving joint owners can take ownership of the property after the death of the deceased joint owner. This transfer can happen automatically, by operation of law, outside of probate.

There are different types of joint ownership depending on the nature of the asset (e.g. real estate vs. a bank account), the relationship between the owners (i.e., whether they are spouses or not), and the state. Certain types of joint ownership come with automatic survivorship rights – which is what allows the surviving owners to automatically own a deceased owner’s share – and other forms of joint ownership do not carry these survivorship rights.

If the deceased joint owner died intestate (without a will) and the property owned jointly was real estate, the form of ownership and the law of the state within which the property is located will generally control how the property passes. If the property owned jointly was not real estate, the form of ownership and the law of the state where the deceased joint owner lived will generally control how the property passes.

If the deceased joint owner died testate (with a will) and the property was jointly owned in a form that carries a right of survivorship, then regardless of what the will says, the surviving joint owners will generally automatically own the property. If the jointly owned property did NOT have a right of survivorship, then the decedent’s will may dispose of the asset and the surviving joint owners may find that there is now a new joint owner.

When estate plans involve trusts, you should be aware that transferring your share of any jointly owned assets to the trust may change the nature of the joint ownership and can impact the rights of the co-owners. If you are the joint owner of an asset, speak with an estate planning attorney to determine the best way to plan for your assets.