You may have thought that setting up a joint or a pay on death (POD) account or property with one of your children would be a good idea. By titling the account or property in both of your names, your child would avoid probate and could easily gain access to the asset. However good it sounds, it may end up creating problems.
Here are three things that may happen.
1) If you have more than one child and only list one child’s name, when you die that child will inherit the entire asset. The other children will receive nothing. If the inheriting child decides to be nice and share with his or her siblings, those siblings will probably have to pay additional taxes on what they are given.
2) If you have a joint account with one of your children and that child gets divorced or a lien is placed on his property, the asset you own jointly may be seized in any settlement.
3) If you name a child on a POD account and that child is still a minor when you die, a court-supervised guardianship will need to be set up until his 18th birthday. At that time, the child will receive whatever is in the account.
Before you make decisions about whether to title any of your accounts jointly with one of your children, you might want to speak with an attorney.
For more information about this and other important topics, go to www.diesmart.com.