Are Joint Accounts a good Estate Planning Tool for Seniors?

Joint accounts are commonly recommended to seniors to avoid probate, but are they a safe and effective Estate Planning tool? Many seniors see the joint ownership of investment and bank accounts as a cheap and easy way to avoid probate since joint property passes automatically to the other joint owner at death. Joint ownership can also be an easy way to plan for incapacity since the joint owner of accounts can pay bills and manage investments if the primary owner can no longer manage his or her finances alone. These are all benefits of joint ownership, but there are also pitfalls for the unaware.


Joint owners of accounts have complete access and the ability to use the funds for their own purposes. This can lead to situations where children who are caring for their parents take money in payment without any supervision. Incorrect or excessive charges can affect medical or other benefits for the senior. In addition, the funds are available to the creditors of all joint owners and might affect the child’s eligibility for public benefits or financial aid.


The other joint owner is entitled to the funds in a joint account if the senior dies. If a senior has more than one child, it may not be possible or practical to put all of the names on each account. While the senior may expect that the children will voluntarily share equally, there's no guarantee. People with several children can maintain a separate account for each, but they will have to constantly work to make sure the accounts are equal and this method becomes very complicated if funds are needed to pay for care.

Unexpected Life Changes

A system based on joint accounts can fail if the child passes away before the parent. If the senior is unable to manage their own finances, it might be necessary to go to court and establish a conservatorship. Without other estate planning, funds may ultimately pass to the surviving siblings with little or nothing for the deceased child's family. This can be particularly unfair if the deceased child’s spouse or children provided significant care for the senior.

When are Joint Accounts helpful?

Joint accounts can be a helpful tool in a senior’s estate plan in two ways. First, when a senior has a spouse or just one child and wants everything to go to him or her, joint accounts can be a simple and convenient way to provide for asset transfer.

Second, the senior can put one or more children on a checking account to pay monthly bills and to have access to funds in case of incapacity or death. As long as the contents of the joint account are relatively small, the risks are comparatively minor.

Estate planning tools such as wills, trusts, and durable powers of attorney are more appropriate for most seniors’ assets. These tools involve less risk and allow the senior to maintain control over how assets are used.

More questions? Contact Lyon Law Office for further information about your situation.