Joint ownership is the simplest and least expensive form of incapacity protection. Your elderly uncle who is becoming forgetful, for example, might put his bank and brokerage accounts in joint name with your sister Gwen, who lives nearby. Then, if your uncle no longer can handle his own finances, Gwen can write checks, reinvest bond interest, and so on.
The catch? Such joint accounts typically are titled "with right of survivorship." When your uncle dies, Gwen will become the owner of those bank and brokerage accounts. No matter what your uncle put in his will, you and other relatives will be shut out.
Therefore, you shouldn’t encourage elderly loved ones to rely too heavily on joint ownership. They might keep a small amount in a joint checking account for paying bills. Beyond that, they can transfer assets into a trust and give someone a power of attorney for assets not held in trust–these tactics will provide incapacity protection without disrupting an estate plan.
