The Unintended Consequences of Joint Ownership | Kids & Independence

SELLERS REGRET: According to the Exit Planning Institute, more than 70% of business owners regret selling their business within a year of the sale. It almost feels untrue the first time you hear it. Seven out of ten people who spent years building something wish they had done it differently.

The regret almost always traces back to the same place: they were not prepared (financially and personally), and by the time the process progressed, it was too late to change the outcome.

The window to maximize value and structure the deal around your actual priorities is well before that. Generally, that window is typically three to five years out. If you’re in or approaching this window, now is the time to ask questions and begin building the transition team for your business and family.

UNDERSTANDING LONGEVITY:

UNINTENDED CONSEQUENCES: Don’t add your child as a joint owner on your accounts or property. It seems like a simple fix, but adding a child (or anyone other than a spouse) as a joint owner on a bank account, investment account, or real estate is not good estate planning—and it can create real problems.

What can go wrong:

• It may trigger gift tax issues
• Your child’s creditors, lawsuits, or divorce proceedings could put that asset at risk
• If you have multiple children but only add one, you unknowingly creating sibling tension
• The money may not end up where you actually intended

Instead:

There are two potentially cleaner and safer ways to give a trusted person access to help you while protecting everyone involved:

1. Durable Power of Attorney—lets someone act on your behalf (pay bills, manage accounts) without owning anything. They have legal obligations to act in your interest.
2. Revocable Living Trust—you transfer assets into a trust, name a trustee to manage them, and control exactly where everything goes when you die.

Both create accountability. Joint ownership does not.

For passing assets at death, use:

• Beneficiary designations on accounts
• Transfer-on-death (TOD) or payable-on-death (POD) designations
• Trust titling

Adding a joint owner feels easy, but it often creates risk, unintended consequences, and family conflict. A proper estate plan—done with a qualified estate planning attorney—protects you, your assets, and your family.

POSSIBLE INSURANCE SAVINGS: You could save on insurance costs by making one change: increasing your deductibles. Consistent income, strong net worth, and high liquidity all allow you to have higher deductibles. Higher deductibles often lead to lower annual premiums. Initiate a conversation with your trusted insurance representative.

KIDS AND INDEPENDENCE: In the words of The Anxious Generation author Jonathan Haidt, “To grow, children need measured risk-taking and exploration in the real world, on their own. Since the 90s in the U.S., we have been overprotecting kids in the real world and under-protecting them online. Most cultures allow kids ages 6 and up to go to the corner store, play with friends in the park or nearby, and walk to school or to their friend’s house. This is what a healthy childhood looks like, and most Americans had this up until the 90s. Ask your child what ONE THING they’d like to do on their own, at home or ideally outside, if circumstances allow it.”

Haidt shared this example—when kids pick one thing they can do on their own, unsupervised, they come back glowing with pride. What success stories do you have? If you want to read more, check out this organization.

THE HISTORY OF NEW FED CHAIRS:

COMPASS ION DISH: If you find yourself in northern Michigan this summer, check out famous cherry pie or cherry chicken salad at The Cherry Hut in Beulah. Michigan cherries for the win!

*The views expressed represent the opinions of Compass Ion Advisors, LLC, as of the date noted and are subject to change. These views are not intended as a forecast, a guarantee of future results, an investment recommendation, or an offer to buy or sell any securities. The information provided is of a general nature and should not be construed as investment advice or to provide any investment, tax, financial, or legal advice or service to any person. The information contained has been compiled from sources deemed reliable, yet accuracy is not guaranteed.

Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC’s Investment Adviser Public Disclosure website here. Past performance is not a guarantee of future results.