Problems With Using Ownership Forms

 If you have one child and would like everything to pass to that child, joint ownership and beneficiary designation might be an appropriate and easy way to do that. Even then, however, a problem which arises in the beneficiary’s life could have an impact on you which you didn’t anticipate. Most people have a more complicated disposition scheme than a single child. Occasionally, people will try to treat all of their children equally by naming each as a joint owner or a beneficiary on an equal amount of account values. Such a plan is fraught with danger. It can cause property not to pass equally as planned and can foster serious family disharmony.

When you make a will or when you provide a provision in a revocable trust calling for an equal distribution to several individuals at your death, no one can change the terms of those instruments. That is not the case however with beneficiary forms. Someone with a valid power of attorney, could in the process of paying your bills, liquidate accounts which are passing to one person while leaving another person’s intact. This could be intentionally or by mistake. Understandably, a beneficiary whose share has been decimated by payment of bills would be disappointed. If that loss is caused by an agent under a power of attorney, it can cause anger and lead to litigation. It is best if the treatment of the beneficiaries is controlled exclusively by you, and that is best done in a will or a trust agreement.

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