Should you include joint accounts in probate?

| May 20, 2021 | Probate & Estate Planning |

Many people wait until it is too late to make proper arrangements for their estate planning. A “poor man’s will” often seems like a very inexpensive and convenient way to transfer wealth or money between two people while avoiding Pennsylvania probate court. However, there are pitfalls of which you should to be aware.

What is a poor man’s will?

A poor man’s will is when an individual adds someone else, often a family member, onto a banking account with the intent of the money passing to them upon death. The intent is often to avoid probate and litigation, but that may not always work. From an estate planning perspective, the first thing to look at is if you are considered a joint owner or an authorized signer on the account in question. A joint owner has many of the same rights if not all the same rights as the other account owner whereas an authorized signer has comparatively few rights.

Establishing account ownership to avoid probate

Evidence is necessary to establish a case toward ownership of the account in order to avoid probate. If you are a joint owner, probate is often not necessary, but evidence to support ownership is still required.  There are very real tax implications of putting someone else’s name on your bank account. Long-term use of an account through both deposits and withdrawals can establish “ownership” of an account even if the user is not a joint owner.

When in doubt, make a plan

If you are the owner of an account through joint ownership, then the account should not need to go through probate, but there may still be inheritance tax due on the death of a joint owner. Proper estate planning can avoid many questions and surprises. Now is the time to begin planning for your estate to mitigate any issues that may arise in probate. Contact an experienced Pennsylvania estate planning lawyer today.

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