As we or our loved ones age, it can become necessary for someone to help manage daily finances, pay bills and make deposits. It may be tempting to use a joint account or to transfer assets. Before you do, there are some things you should consider.

1. Titling an account or property jointly is a transfer of legal title. Unless you specify otherwise, the property will likely be treated as joint tenants with right of survivorship. This means that at the passing of one account holder, the surviving account holder owns all of the money or property. Jointly held accounts and property avoid probate and do not pass under the Will or Trust. So there is no obligation for the surviving owner to share the account or property with other heirs or beneficiaries. This can create all sorts of tension and questions later because it may not have been the intent.

2. It’s not always a good idea to move accounts and property around to qualify for Medicaid, Veterans Affairs benefits or other public welfare assistance. Most government assistance programs have broad powers to look back for a period of 3 to 5 years to determine if assets were transferred. The government may refuse to pay for needed care if they find transfers. That can create an unexpected bind.

3. Gift and Estate Tax issues can arise. True, most Americans do not have to worry about Federal Estate Taxes. A slightly higher number will be affected by state Inheritance Taxes. However, Gift Taxes can be triggered by much smaller numbers, inviting unexpected headaches.

Professional guidance can help you avoid these pitfalls and keep things going smoothly.


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    Climbing the Money Tree


    R. Joseph Ritter, Jr. CFP® is a CERTIFIED FINANCIAL PLANNER(TM) and founder of Zacchaeus Financial Counseling, Inc., a non-profit organization providing financial planning services to low-income households and households experiencing financial strain.

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