There are numerous estate planning documents that can perform multiple important functions for those thinking about their eventual death and possible future medical incapacitation. Many individuals think mainly about their legacy and how to pass their belongings to their loved ones.
These testators would prefer to bypass probate proceedings and let property move directly to the next generation when possible. Assets that go through probate are often vulnerable to claims by creditors, including Medicaid. People can only receive the remaining property after the estate repays all of someone’s debts. Additionally, it can take months to complete probate proceedings, leaving beneficiaries without access to their inheritance.
Avoiding probate court means protecting certain assets and giving your loved ones quicker control over those assets after your death. One way to keep financial resources like bank accounts or investment accounts out of the probate courts is to hold the account jointly with someone else. Is that the best possible solution for financial resources?
Joint accounts are effective for end-of-life transfers
Adding someone as a co-owner of an account gives them full access to those resources now, although you may not want them to use your bank account until after your death. The person you name as co-owner will receive the full balance and complete control over the account when they provide the financial institution with proof of your passing later. The process is relatively quick and does not need to involve the probate courts at all.
There are obvious drawbacks to such arrangements, including the possibility that the joint owner that you add could misuse their access and withdraw assets without permission well you are still alive.
What other options could you employ?
Some people utilize transfer on death designations for their major financial resources. They can name someone to become the beneficiary of the account immediately upon their death without granting access to or control over the account prior to that point.
Another option may be to move those financial resources into a trust. Trusts help ensure long-term control over how people use those assets and prevent them from becoming part of your estate that passes through probate court. Looking into different solutions for your most valuable assets will make estate planning more effective.