How Does JTWROS Work?

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Do you know what will happen to your assets when you pass away? One of the concerns most frequently discussed with a financial planner is how to ensure your spouse and children will not experience financial hardship if you were to pass away unexpectedly. Savings and investments will not do your family much help if all that money is caught up in legal proceedings for months or years after you or your spouse pass away. Thorough estate planning can help limit how much time your assets spend in probate. One such option worth setting up is a Joint Tenants with Right of Survivorship (JTWROS) account.

 

What JTWROS Is

When someone passes away, their assets and property (including a brokerage account)  typically go through probate, which is the legal process of wrapping up a deceased person’s estate. Probate often takes many months or even years to complete. Joint Tenants with Right of Survivorship (JTWROS) is a type of brokerage account which specifically avoids probate. With JTWROS, when one owner passes away, the account is already the property of the surviving owner and therefore avoids probate. Both (or all) owners of the account have equal rights to the account’s assets, which means any owner can make investment transactions. JTWROS accounts can be owned by more than two people, but because all assets are owned equally, this type of brokerage account is most commonly shared between spouses. The biggest benefit of JTWROS accounts is that the right of survivorship is set up when the account is initiated, which means the account will not need to go through probate and is accessible to the surviving owner without waiting.

 

Setting Up JTWROS

In order to create a JTWROS account, all owners have to meet the following four qualifiers:

  • All co-owners have to acquire the assets at the same time (i.e. all owners have to be added when the account is created).
  • Co-owners must have the same title on the assets.
  • All owners have to have an equal share in assets — no matter how much each person pays into the account.
  • All owners have to have the same right to own/possess all assets.

As long as all of those qualifiers are met, a JTWROS account can be created. Of course, it’s important to work with your financial advisor to ensure the wording of the document specifies the right of survivorship. There are other joint tenancy options, and if right of survivorship isn’t specified — or if one of the above qualifications is not met — the account will default to a less-restrictive form of ownership.

 

Protect Your Assets

If you are looking for ways to protect your assets and avoid probate, a JTWROS account can be a great way to ensure your spouse and family have access to at least some of your assets immediately in the event of your death. For more information on JTWROS accounts and other investments, let the Anchor Wealth Management team help. Contact us in Lanark and Rockford today.