When you think about estate planning, you probably think about documents like wills and trusts. These legal devices are used to facilitate postmortem asset transfers, but under some circumstances, assets can pass directly even if documents such as these were never executed.
Joint tenancy is the condition that exists if you add a co-owner to property that is in your possession. For example, if you decided to add your daughter to the title of your home as a co-owner, she would become a joint tenant.
If you were to predecease your daughter, she would inherit the entirety of the home, and this would be true if you had a will, if you had a trust, or if you had no estate planning documents at all.
The good part about this arrangement is that the transfer of ownership would take place outside of the legal process of probate. When a last will is utilized, this type of transfer would be subject to the probate process. This process can be time-consuming, and your daughter would not assume ownership of the home until after the probate court closed the estate.
She would assume full ownership of the home in a more timely manner if she was a joint tenant.
Though joint tenancy would facilitate an efficient transfer, there are some potential drawbacks to take into consideration before you embrace this course of action.
When you plan your estate, you probably want your heirs to assume ownership of the property after you die. If you wanted them to have the property while you are still living, you could just give it to them while you are alive.
You maintain ownership of your property because you may need the assets yourself at some point in time.
With joint tenancy, the person that you add to the title of the property owns half of the property right away. The transfer is effective as soon as you add the joint tenant to the title or deed.
As a result of this, if the joint tenant was to run into financial or legal problems, his or her portion of the property would be subject to attachment.
Plus, if you wanted to sell the property, you would have to understand the fact that you only own half of it in the eyes of the law.
There are safer and more effective solutions that can be implemented if you wanted your daughter to inherit the property outside of probate after your passing.
Our firm has prepared a free report that takes an in-depth look at joint tenancy. To access your copy of the report, visit this page and follow the simple instructions: The Trouble With Joint Tenancy.
- Generational Wealth is Key to Leveling the Playing Field - November 24, 2020
- Fair Isn’t Always Equal and Vice Versa - November 19, 2020
- Staying Current is Especially Important in the Pandemic - October 28, 2020