Joint accounts

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Updated: 4/13/2007 3:35 pm
In the case of property in which two or more parties share ownership, when one dies, the remaining owner automatically become the owner of the entire property. This is known as the right of survivorship. It's important to note that since you're not the sole owner of the assets in a joint account, you can't dispose of them in your will. Of course, this is one the main advantages of this type of ownership--it avoids probate. There are also no federal estate taxes, and in most states, there are no death taxes, and best if all, the transfer is automatic. During your lifetime, you or a joint owner may choose to break up the joint ownership either by sale or by transfer to another party. These rules apply generally to those persons living in a non-community property state and includes all jointly owned property including homes, household goods, bank accounts, stocks, automobiles, and the like. The rules for persons living in a community property state differ somewhat. Here, each spouse owns half of the assets. After one spouse dies, the surviving spouse keeps half with the other half becoming a part of the deceased individual's probate estate. Income and pensions are treated as community property with half divided to each spouse. Only separate property owned prior to marriage is exempt, unless the separate property is used to purchase property in both spouses' names; then it becomes community property with each spouse retaining half ownership. Not only what you own, but also how you own it can affect your inheritance rights and have income and death tax consequences you may not be aware of. Therefore, consulting with an attorney regarding rights of survivorship and community and separate property could be a good idea.
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