My husband and I have a joint investment account with $500,000 in it. It’s money I came into the marriage with 20 years ago and have added to with family gifts.
If I were to predecease my husband, my will states that my son will receive half of this account, but because I put this money into a joint account with my husband, would he have access to all of it before my estate is even opened?
What will prevail? And how should I address this? My husband will receive other assets and has his own money, as well.
Wife & Mother
Related: ‘My house and car are paid off’: I have $1 million in stocks — so where do I invest $100,000?
Dear Wife & Mother,
You both have full ownership of that account, yet only 50% of the money is technically yours.
There is a common misnomer about joint accounts held by spouses — namely that each party believes they have 50/50 ownership in the account. However, in reality they have 100/100 ownership.
That means two things. First, you could legitimately move half the money into another account for your son, preferably with your husband’s knowledge. Second, if you die before your husband, he will have 100% ownership of the $500,000. He will be free to do whatever he wants to with it.
Inheritance is separate property under the law, so that money initially belonged to you. However, by depositing it into a joint account with your husband, you commingled the funds, so they became part of your marital estate. If you were to divorce, this money would likely be split 50/50.
You could speak to your husband about using all of the $500,000 as an inheritance for your son, as part of your joint estate plan. Or you may decide to split it 60/40, with the larger share going to you, and eventually to your son. The income from the investment account is also marital property.
QTIP versus a marital trust
A qualified terminable interest property trust, known as a QTIP trust, is useful in second marriages. An A-B trust is another option: The “A” trust is revocable and holds the surviving spouse’s assets, while the “B” trust is irrevocable and holds the deceased spouse’s assets.
A QTIP irrevocable trust has two types of beneficiaries: a lifetime beneficiary (your husband, in this case), who would receive an income over their lifetime, if you so choose, and a remainder or final beneficiary, who would receive the trust’s assets upon the lifetime beneficiary’s death.
A marital or “A” trust is an irrevocable trust that gives the surviving spouse complete control over the assets. Upon their death, the trust’s assets would then be passed down to the named beneficiaries (usually children or grandchildren).
A frank talk with your husband should resolve this issue without having to resort to legal and financial gymnastics.
In addition to estate planning and roping off assets for children and grandchildren, trusts are also useful in planning for Medicaid and for long-term care, in avoiding paying higher rates of income tax, and in planning for possible divorce or for becoming incapacitated through illness or accident.
You can also make tax-free gifts to your son during your lifetime. The Internal Revenue Service’s estate-tax exemption on wealth transfers during a person’s lifetime and upon their death is $13.99 million per person for 2025.
The annual exclusion for gifts in 2025 is $19,000 for a single person, and double that for married couples. If a gift is greater than that, you need to file a tax return. But unless Congress takes action, that exemption is scheduled to revert to the previous level of $5 million in 2026.
Problems should you divorce
Practically, you could empty this account, but the money would still be regarded as community property even if you put it into an account in your name. Legally, that could result in ramifications such as criminal contempt charges if you were going through a divorce and attempting to drain assets.
“If one spouse cleans out a joint bank account and then files for divorce, or withdraws money from an account against a judge’s orders, he or she can face serious repercussions — depending on the circumstances and what the money was used for,” says McCabe Russell, a Maryland law firm specializing in divorce cases.
“The court may order him or her to replace the funds, even if it’s already been spent. Or, depending on the circumstances, the court may order the person to pay additional fines, or the attorney fees of the other party,” the law firm adds.
If you removed $50,000 from the account, a judge could award your husband that money in divorce court.
“The court could also hand down penalties, like adjusting the division of property to make up for the removed funds,” it says. If you removed $50,000 from the account for a round-the-world cruise, a judge could award your soon-to-be ex-husband that money in divorce court.
“As you can see, it’s important to remember that your joint bank account is considered marital property. Just like any other asset, it’s crucial to keep it safe so that, in the event of a divorce, it can be divided fairly,” McCabe Russell says.
Divorce judges have gotten wise to such shenanigans. “It’s not uncommon for judges to put orders in place at the beginning of a divorce case that prevent both account owners from accessing the funds, except for specific approved reasons,” it says.
Financial issues for blended families
But to return to your original question: Second marriages often throw up these kinds of financial dilemmas for blended families.
“Remarriage can be one of the best decisions for an aging person,” says the New Jersey-based law firm Hanlon, Niemann & Wright.
“Many older clients take for granted that their adult children will inherit from them when they pass away. The reasoning behind this assumption is because the majority of their property and life have been spent with their previous spouse,” the law firm says.
“However, a new marriage means that the marital property is governed by the laws of the new marriage,” it adds. “If there is no prenuptial agreement, then the surviving spouse would, under the laws of New Jersey, inherit at least one-third of the estate.”
An open and honest discussion with your husband should let you resolve this issue without having to resort to legal and financial gymnastics. People are not always so reasonable in the pages of The Moneyist column, but I am hopeful the odds are better in real life.
You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com, and follow Quentin Fottrell on X, the platform formerly known as Twitter.
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