Beware of Joint "Convenience" Bank Accounts
Although it is common to add a family member’s name to a bank account as a “convenience,” the strategy can produce negative results. Under G.L. c. 190b Article VI Sec. 6-101, joint bank accounts can pass outside probate court. This is a desirable outcome, but there are numerous pitfalls of which to be aware.
The joint account holders problems (divorce, creditor issues, etc.) can become your problems, and it could take significant time and legal expense to show the joint account holder did not contribute money nor claim interest on their tax returns.
Accounts passing outside probate might not comport with your dispositive estate plan. While a will or other writing may or may not state certain accounts are held for “convenience purposes only,” disagreements may arise as to the original intent of the decedent, which can lead to protracted litigation.
The joint account holder might predecease you, and there also might not be probate assets to pay funeral expenses, medical bills, taxes, accountant fees, and other final expenses.
Pay-on-death (POD) and Transfer-on-death (TOD) beneficiaries on an account have their own issues of which to be aware, such as planning for incapacity, which could result in court-involvement if a MassHealth application becomes necessary and a Conservatorship action needs to be filed.
These situations are very fact-dependent and can be appropriate in some circumstances, but most people should speak with an experienced estate planning attorney to avoid potential disagreements and be sure their intentions are realized.
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