One tactic for dealing with potential personal incapacity—inability to make your own financial decisions—is to put some assets in joint ownership, with right of survivorship. For example, you might name a son or daughter as joint owner of your bank account so he/she can pay bills for you, handle deposits, etc.
However, there are potential problems with this approach:
* At the death of one co-owner, the survivor automatically inherits the balance of the account. That’s true no matter what it says in a will. In the above example, your designated son/daughter would inherit your bank account while any other children will be excluded.
* Joint ownership provides no protection against poor judgment. If an elderly person decides to empty a joint bank account to invest in some kind of a sham deal, there is nothing a younger co-owner can do about it. The younger co-owner similarly might spend the money improperly.
* Creditors of either co-owner may have access to the joint account.
To reduce the need for joint ownership of a bank account, arrange for automatic deposit of investment income and Social Security checks as well as automatic payment of utility bills. If some joint ownership is still desired, limit the amount kept in the account.