When planning for the future, especially when considering asset distribution after one’s passing, several strategies are appealing.
One such solution is naming children as joint owners of assets. While this may appear to be a straightforward estate planning strategy, be aware of the potential risks involved.
1. Loss of control over assets
Handing over joint ownership of assets to children could lead to a loss of control. Once children become joint owners, they have legal rights to those assets. If everyone’s opinions do not align, making joint decisions about assets could trigger conflict.
2. Unintended consequences
Naming children as joint owners can have unintended consequences. For example, if a child divorces, their former spouse may claim a portion of the assets. Additionally, asset ownership might transfer to their heirs if a child passes away before the parent, bypassing the parents’ intended distribution plan.
3. Family dynamics
According to a survey, roughly 60% of respondents reported family disputes because of improper estate planning. Naming specific children as joint owners and excluding others could spark family conflicts and hurt feelings. Consider the potential emotional impact on family relationships while planning your estate.
4. Loss of eligibility
If a child becomes a joint owner, it could impact their eligibility for certain government benefits. For example, ownership of additional assets increases net worth and possibly income, thus potentially resulting in the loss of important benefits if the child receives need-based assistance.
Estate planning should bring you and your family peace of mind, not cause strife and stress. Understanding the challenges of jointly owning assets will help you confidently move forward to align your estate planning with your wishes.