In an effort to simplify the passing of wealth at the time of one's death, many Oklahoma residents consider joint ownership. This estate planning approach requires that an individual completes the paperwork needed to title assets jointly with the desired heir. Upon death, the asset then becomes the property of the joint owner, which occurs outside of the probate process. While this approach may seem to be a straightforward means of transferring wealth, there are a number of negative factors to consider.
If the original owner intends for the joint owner to share a portion of the inherited wealth with children or others, joint ownership does nothing to ensure that such a goal is met. Once the joint owner inherits the asset, he or she can do whatever he or she wants to do with it. There is nothing to guide whether the intended heirs ever receive any benefit from the asset.
Another problem can arise due to the fact that jointly owned assets are subject to property division during divorce, and can also be seized for back taxes, legal judgements and other financial problems. There is no protection afforded to either owner, and the wealth that was intended to pass on to a loved one can end up being split down the middle if he or she goes through divorce or financial turmoil. It is important to note that these outcomes can occur even before the original owner passes away, leaving two people in financial strife.
When considering estate planning options, joint ownership can be a risky proposition for Oklahoma residents. A better approach is to place the desired assets into a trust. Doing so can give the original owner a measure of control over how those assets are ultimately distributed. A trust also serves to protect assets from loss during divorce or financial distress.
Source: recordonline.com, "Bonnie Kraham: Common elder law estate planning mistakes to avoid", Bonnie Kraham, July 1, 2015