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Ask the Retirement Expert: Should I Make My Kids Joint Owners on My Accounts if I’m Considering a Second Marriage?

Amy Jamrog, CLU®, ChFC®, CASL® •  June 17, 2016 | Home and Family, Your Finances, Ask the Expert

Each week our Northwestern Mutual retirement experts answer your questions. This week’s question:

By Amy Jamrog, CLU® ChFC® CASL®

Amy has been a Wealth Management Advisor with Northwestern Mutual since 1999. She has achieved company, industry and community recognition since her first year in business. Over the past 16 years, she and her team have developed a specialty in helping baby boomers with retirement income planning.

If I’m considering a second marriage, should I make my kids joint owners of my accounts to ensure they remain first in line to get my assets?

If you want to ensure that your children receive your money when you pass away (rather than it going to your new spouse), putting them on as joint owners might not be your best strategy.

Making them joint owners gives them the same rights to the money as you have. This can be risky on many levels: For example, there is nothing stopping your son from withdrawing money from the “joint” account to buy a Ferrari—and he wouldn’t necessarily need your permission to do so.

Also, consider the possibility that one of your children might get divorced in the future. The joint account that you own with your son or daughter could be considered their marital asset. It means that in your effort to protect money for your own child, he or she could lose some or all of your money in a divorce.

In addition, be careful putting money in your kids’ names if they have any of their own children going to college. A joint account registration could adversely affect your grandchildren’s financial aid application.

A better and safer option is to re-register your account as a TOD: Transfer on Death. This option is also sometimes referred to as a POD: Payable on Death. This is the simplest way to specifically designate beneficiaries, have money go directly to your children at your death and, most importantly, not have them jointly own your money in your lifetime.

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