Jeff Ritchie

Jun 19 2017

Part 1 of 2: Examining Account Types – Joint Accounts with Survivorship

Thinking about opening a joint account? Here are some items to consider when opening a joint account with survivorship with someone other than a spouse:

  • All owners can transact on the account at any time and have full rights to the account.
  • Survivorship means that at one owner’s death, the ownership passes to all surviving owners.
    • This may impact your Last Will and Testament and may not be consistent with your estate plan.
    • This may result in the unintended disinheriting of some people and/or the unplanned enrichment of others.
    • Any funds remaining in the joint account may not be available to pay your final debts and expenses.
  • Funds may be withdrawn by a joint owner. This means that a joint owner can withdraw a portion or all of the funds in the account regardless of who put the money in the account.
  • Funds may be subject to claims by a creditor regardless of who made the deposits into the account. Examples include, but are not limited to, divorce claims, judgments, tax liens, bankruptcies, etc.
  • Joint accounts with someone who is not your spouse may create possible federal gift tax liabilities that you may be responsible for. Even if the surviving joint owner wishes to share the remaining balance with others or pay all of your final expenses, federal annual gift tax exclusion limits may make this difficult or impossible.
  • College grants, loans, or scholarships may be affected. If a joint owner or joint owner’s children apply for financial aid, they may have to report the account as an available asset which could impact the amount of financial aid they receive.
  • If your goal is to have someone else to be able to sign checks on your account if you are unable, consider adding them as a signatory on your account rather than a joint owner.
This is intended for educational purposes only.  Hills Bank cannot provide legal advice.  If you have any legal questions, we suggest consulting your attorney.

View the complete Examining Account Types Series:
• Part 1 – Examining Account Types – Joint Accounts with Survivorship
• Part 2 –Examining Account Types – Payable on Death Accounts

Jeff Ritchie

About Jeff Ritchie

Jeffrey Ritchie, JD is Vice President with Trust and Wealth Management at Hills Bank’s North Liberty location on Forevergreen Road. He has been at Hills Bank since 2005 specializing in personal trusts and estate administration. Jeffrey’s professional expertise includes estate planning and probate, real estate, and income tax preparation. Jeffrey earned his undergraduate degree at the University of Northern Iowa and continued his education at the University of Iowa College of Law. Prior to joining the bank, he practiced law in the Amana and Marengo communities. Jeff can be reached at 1-800-899-8858.

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