You may be familiar with the idiom “A little knowledge is a dangerous thing.” When it comes to your money, not only can it be dangerous—it can be downright expensive. For example, one often reads that titling one’s assets as “joint” avoids probate following a death. Doing so is touted as smart because it saves legal fees and keeps family business private.
When parents read about such potential benefits, they often find it appealing to title accounts jointly with their children. Perhaps they assume that joint titling of assets with their children helps to avoid income or estate taxes. Unfortunately, they are likely unaware of the possible negative consequences to this account registration decision—consequences which can result in dissipated assets and increased tax liabilities.
As Karen Schecter Dayno, estate attorney with Timoney Knox, LLP, indicates:
“While joint tenancies may be a good way of holding property for married couples,
there are potential problems that may arise when a parent holds property
in joint names with his or her child.”