You may hear about joint tenancy as a probate avoidance strategy. Let’s look at joint tenancy and the question of whether or not you should create a joint tenancy with your child.
What Is It?
Joint tenancy is co-ownership. If you were to add someone to the title of your property as a co-owner, this person would be a known as a joint tenant.
Right of Survivorship
Joint tenancy generally comes with right of survivorship. This means that the surviving joint tenant would inherit the entirety of property held in joint tenancy when the other joint tenant dies. The transfer of the share that was owned by the deceased joint tenant to the surviving joint tenant would take place outside of probate.
Probate is a legal process that comes into play when certain personally owned property is being transferred. If you were to create a last will directing the transfer of your personal property after your death, the property would become probate property at first.
So, let’s say that we are talking about a home. If you leave your home to your child in your will, the transfer must go through the probate process. This process can be time-consuming and costly.
On the other hand, if you made your child a joint tenant, he or she would inherit the entirety of the home after your death outside of probate.
Should You Do It?
Now let’s get on to the question of whether or not it is a good idea to utilize joint tenancy as a way to transfer property outside of probate.
The benefits are pretty clear cut, but if you are considering joint tenancy you should certainly be aware of the drawbacks.
When you make someone a joint tenant they are immediately a co-owner. When you own property, it can be targeted by creditors, former spouses to be, and litigants seeking redress.
If the joint tenant that you added to the title of your property was to encounter any financial difficulties, the property could be attached.
There is also the matter of selling the property. The joint tenant would have to agree to sell his or her share of the property if you wanted to sell it. You no longer have absolute control of the property in question.
These are a couple of the drawbacks that you should take into consideration before you dive into joint tenancy as an estate planning solution.
Estate Planning Consultation
Before you make any big decisions you may want to discuss things with a licensed estate planning attorney. Your lawyer will explain the pros and cons of joint tenancy to you in detail and answer all of your questions so you can make a fully informed decision.