Joint Accounts With Right of Survivorship

• Anyone setting up a joint account with rights of survivorship must be aware of the legal and inheritance aspects of the account. Banks or other financial institutions may also set up agency or convenience accounts in which another person may access the funds but the account is not jointly owned. Otherwise, when setting up a bank account, most banks will title an account as joint ownership with rights of survivorship by default. The difference in account title is important if one owner would like the account's assets divided among other heirs after his death.
  
  

Account Titling for Estate Purposes

• Although probate laws vary according to the decedent's state of residence, in general, any accounts titled solely in the decedent's name become part of the estate's assets. Accounts titled in a joint account without right of survivorship also become part of the estate. Accounts titled jointly with right of survivorship belong to the surviving account holders with the assets belonging equally to the number of surviving joint account holders. These rights of survivorship continue among remaining account holders if three or more parties have title to the account and one dies.
  
  

Disadvantages

• There are several disadvantages in a joint account with right of survivorship. The first is that the account belongs equally to the named parties, and either party may withdraw funds without the other's knowledge. The second disadvantage is that one account owner may expect that upon his death, the other account owner will "share" the proceeds of the account with other heirs named in the will. The surviving joint owner is under no such obligation. A third problem is that the account may be seized by creditors of one party under a judgment lien with no consideration to the other account holder.
  
  

Alternatives to Joint Accounts with Right of Survivorship

• If a person's primary reason for holding a joint account is to pass the assets on to the joint account holder and avoid probate, there are alternatives. An account holder may set up an account as "payable on death" or "transferable on death" to a named beneficiary. Titling an account in this manner supersedes assets left in a will and does not go through probate. The advantage to titling an account in this way is that the beneficiary cannot touch the assets while the account holder is alive.