What to know about joint accounts PART2

Joint accounts with rights of survivorship Among joint accounts are those with right of survivorship. "There are really only two reasons to open such an account," says Daniel Goodman, president, CEO and chief investment officer of GFI Investment Counsel Ltd in Toronto. "It's really to plan for the estate and avoid probate fees, and also for ease of administration." Yet setting up a joint account with right of survivorship to avoid probate fees should be considered carefully. Undo challenges can occur when accounts are shared, such as issues with divorce or family feuds over estate decisions. According to Goodman, potential hazards can include: • Tax implications -- If the joint account is not with your spouse, there can be tax considerations in transferring the account. • Loss of control -- If you put your assets in a joint account, you have a potential loss of control. That new joint account owner must agree to any changes to the account, sales, etc., and you may not have given that a lot of thought. • Credit rating danger -- If one joint account holder has creditor issues and goes bankrupt, the other joint account holder gets pulled into that situation. The benefits of joint accounts According to Goodman, as people get older they risk losing their investment acumen and the fraudsters of the world prey on the elderly. One of the "great benefits of opening a joint account with one of your children" or a close relative, for example, is the added safety factor: "If a parent or grandparent is approached by a fraudster and says, 'Well, all my assets are set up with my son (or whoever), I will run this by him,' you usually get a click on the other end of the line," says Goodman. The bottom line: think twice Foresight and knowledge can go a long way in avoiding any joint account pitfalls. "Depending on the size of one's estate and what they're rolling into joint, people should at minimum speak to their accountant and quite possibly an estate lawyer," says Goodman. "I would strongly encourage people to think about the pitfalls, the loss of control -- these are things that people don't necessarily focus on enough."