A common concern for many parents in Pennsylvania is that their children successfully inherit their assets. To this end, some residents of the Keystone State may decide to set up a joint tenancy account. While it is true that joint tenacy can pass a parent's assets to children, an article from Forbes explains that joint tenacy has some drawbacks that should be considered.
Anything set up in a joint tenancy arrangement is under the ownership of both parties. In the case of a parent and a child, both own the assets in the account. The child will “inherit” the account assets when the parent dies, though in reality the child has possessed ownership from the time the account is set up. The only thing that changes when the parent passes away is that the child is now the sole owner of the assets.
However, because the child has an ownership stake from the start, that means the child can access the account assets before the parent passes and spend the money as he or she wishes. Assuming, however, that the child will refrain from accessing the joint tenant account until the parent dies, in the event the child files bankruptcy, the tenancy assets can still be claimed by creditors to pay off the child's debts.
Additionally, joint tenancy assets are also at risk of divorce judgments. Should the child marry and later divorce, the tenancy assets could be the target of claims by the other spouse. The parent may get dragged into the proceedings as he or she tries to prove that the tenancy funds are not subject to claims from the child's spouse. In short, these issues presented by a joint tenancy arrangement can cause a parent to expend time and effort that may not have been needed if the parent composed a standard will and testament.
This article is intended to inform the reader about joint tenancy arrangements and should not be taken as legal advice.