Spring and early summer are common “Do It Yourself” (DIY) seasons in New Hampshire. Whether it is getting the lawn just right or tackling a new layout for the mancave downstairs, people take pride in doing projects themselves rather than hiring someone else to do the work.
If one is not careful, this train of thought can be applied to making “seemingly” simple changes to their own estate plan, as it can feel like a quick and easy fix!
However, like with any DIY project, this approach carries its own risks that people unfamiliar with estate planning might not be aware of.
The most common is for people to add their children as co-owners of their bank accounts or real estate. While this may seem like a convenient way to manage assets and avoid the costs and delays of probate, it can actually lead to significant complications and unintended consequences. Here are two of the most common:
1. Loss of Control and Vulnerability:
One thing that should be made clear for all of these items: a co-owner of an asset is an owner of that asset. By adding your child as a co-owner of your home or as joint owner of your bank account, you relinquish sole control over that asset. This means, among other things, that your child could potentially use or transfer your funds without your consent.
2. Creditor and Legal Issues:
Co-owning assets exposes those assets to the creditors of all owners. Debt collections, lawsuits, and other events, even if they only involve your children, can put your assets at risk if your child is listed as a co-owner. This is especially concerning for valuable assets like real estate, where creditors could potentially place liens against the property.