Joint Tenancy Account as a Will Substitute

Question: With most of my estate consisting of cash in a bank account, I am considering retitling the account in joint tenancy with my daughter who is my only child. Isn’t this much simpler than preparing a Will and having my assets probated?

Answer:  Joint tenancy is a form of holding assets by two or more people. Upon the death of a joint tenant owner, the property held in joint tenancy passes automatically to the surviving joint owner(s), regardless of what the deceased joint owner’s Will or other estate plan documents provide. Joint tenancy assets are in many respects a simplified, inexpensive version of an estate plan for an individual as they provide for the passing of assets upon the death of the first joint owner without probate.

In planning to use joint tenancy assets as an alternative to a Will or other estate plan documents, you should consider the possible consequences. Once you place assets in a joint tenancy bank account with your daughter, she will have access to the account funds. Since either of you can withdraw funds from the joint account at any time, your daughter could withdraw the account funds for her own purposes, your wishes notwithstanding.

Even if you have complete trust in your daughter, you must consider the other consequences of joint ownership. If your daughter becomes insolvent or files for bankruptcy, some or all of the joint tenancy assets can be attacked by your daughter’s creditors or a bankruptcy trustee.  If your daughter is married and later divorces, her spouse may claim an interest in the jointly-held funds. In any such case, while you may succeed in establishing that the funds are yours, not your daughter’s, you need to consider the time and costs which may be involved in establishing that these funds are not subject to the claims of your daughter’s creditors or divorcing spouse. Finally, the joint tenancy arrangement may ultimately not achieve its purpose in the unlikely event that your daughter predeceases you in which case assets will pass by your Will or the laws of intestacy if you do not have a Will in place.

There are other tools available to avoid probate. The most commonly-used technique is a living trust whereby assets are titled in the name of a trust created during the asset-owner’s lifetime.  A living trust permits the passing of assets upon the trust creator’s death without going through probate. Establishing a living trust no doubt involves greater expense than the creation of a joint tenancy bank account but provides more assurance that your assets will not impermissibly be used nor attacked by a third party.

Joint tenancy accounts may serve a purpose in estate plans providing easy access to funds for surviving joint owners.  Joint tenancy accounts are not, however, a risk-free means of passing assets and accomplishing your testamentary wishes. 


The Tax Corner addresses various tax, estate, asset protection and other business matters.  Should you have any questions regarding the subject matter or if you have questions you want answered, you may contact Bruce at (312) 648-2300 or send an e-mail to [email protected].

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