There are various different ways that you can transfer property to someone else, either while you are living, or after you pass away. To create an effective estate plan you should consult with an estate planning attorney, gain an understanding of all of your options, ask questions, and make informed decisions.
If you buy into some easy answers that you hear people talking about around the water cooler, negative consequences could result. One of these notions is the idea that joint tenancy is a viable substitute for a comprehensive estate plan.
What Is Joint Tenancy?
A joint tenant is a co-owner of property. Let’s say that you added your daughter to the deed of your home. As soon as you enter into a joint tenancy with your daughter, she would own half of the property in question.
With right of survivorship, the surviving joint tenant would inherit the entirety of the property. Using our example, your daughter would become the sole owner of the home after your passing. The transfer of your share of the property would take place outside of the legal process of probate.
People often want to avoid probate because it can be time-consuming and expensive.
Drawbacks of Joint Tenancy
All of the above can sound great on the surface, but there are some serious drawbacks to take into consideration. As soon as your daughter becomes a joint tenant, any financial problems that she may have become your problems as well.
If she was to become the target of a lawsuit, her portion of the property that is held in joint tenancy would be subject to attachment. Creditors could potentially go after the property. If she were to run afoul of the Internal Revenue Service, a tax lien could be imposed on the property that is held in joint tenancy.
Because your daughter owns half of the property, she would have to sign off on the sale if you wanted to sell the property. This is another one of the drawbacks.
Let’s say that you wanted the value of the home to be spread among multiple heirs after you die. You could instruct your daughter to sell the property and distribute the proceeds in accordance with your wishes.
If she has other ideas, she is not legally compelled to follow these verbal instructions.
Download Our Free Report on Joint Tenancy
We have provide some basic information about joint tenancy in this post. If you would like to learn more about the drawbacks, download our special report that puts the subject under the microscope.
The report is being offered free of charge at the present time, and you can download it through this website. To access the report, click the following link: The Trouble With Joint Tenancy.
John’s practice focuses on the use of Wills and Living Trusts in Estate Planning to help individuals protect their families and preserve their legacies after their deaths, but his practice also focuses on the critical issues of protecting individuals with dementia or other diminished capacity, assisting individuals in qualifying for Medicaid and other government benefits to offset the costs of long-term care, and providing special needs planning.
John is admitted to practice law in North Carolina, South Carolina, Kentucky, and Ohio, and he is accredited by the Department of Veterans Affairs.
- What You Need to Know about the Medicaid Look-Back Rule - January 3, 2023
- How to Pass Down Your Legacy in Your Estate Plan - October 3, 2022
- Practical Steps to Take after Receiving a Terminal Diagnosis - September 30, 2022
