Retirement Investor

Beneficiary or Joint Account Owner – How to Title Assets


The other day I met with a widow and her son. Her husband had recently passed and she wanted to have all of their accounts retitled into her name. Pretty standard request under the circumstances. Because of her age, she also wanted to list her son on all of the accounts. I clarified with her whether she meant as a beneficiary or as an owner. She wanted him to be joint on the accounts “that way he can step in and handle everything on the account.”

This is a common request. I see it all the time. And it makes sense, right? Mom or Dad just want to make it easier on the kids in case “something” happens.

I urge you not to do this. This situation is what a power of attorney (POA) is for. Make the trusted individual the power of attorney so that when needed, that individual can step in and take over. There are good reasons to do this, one of which is limiting legal liability (or more appropriately vulnerability) if your child gets sued. Having joint accounts muddies the waters on assets the attorney can raid. One day you are living comfortably, the next monies you are counting on to live are being awarded to someone else by the court. Don’t let this happen.  

Another concern is the question of whether the money in that joint account has been adequately accounted for in the estate plan. The last thing you want to inadvertently do is cause trouble by leaving assets that are intended to be distributed a certain way out of the very plan that ensures that they will be distributed the way you intended. Not to mention this could cause tension among the survivors. I have seen it. Blood may be thicker than water, but inheritances often spoil family relationships.

Lastly, what happens if your child (God forbid) predeceases you? I have seen this happen too. Now part of your money, because it is listed jointly, is being considered as part of the child’s estate for the purposes of taxes, probate, inheritances, etc.

You want to leave a legacy. You want to make it easy on everybody. Take some time to do some simple planning to avoid the common complications. 

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Thomas Rindahl

Thomas Rindahl PhD, MBA, CLU®, ChFC®, CFP®, LUTCF, BFATM is a financial advisor in Tempe, AZ. Through comprehensive and holistic financial planning, he has helped his clients to navigate the twists and turns of life for over 20 years.

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