If you’re taking a look at your asset ownership when creating your estate plan, you may be considering using joint tenancy as a way to own certain assets. This can be beneficial in many cases, but it has many pitfalls. We’ve outlined below some information on the use of joint ownership. If you have any questions, or if you’d like to discuss how joint ownership would affect your estate plan, meet with an estate planning attorney.
What is joint tenancy?
Joint tenancy is a form of ownership in which two or more people own property. Many people choose to use this type of ownership, especially with real estate. Joint tenancy is also used with other assets such as bank accounts. In most cases, married couples choose to use this type of ownership.
What are the benefits of joint tenancy?
One main benefit of owning property jointly with another person is the fact that the asset can avoid the probate process. Once you die, the property will be transferred to the co-owner without having to go through probate. This is a great way to make sure that your assets are quickly inherited. It’s also an easy way to title your asset and can quickly give you and another individual access to the responsibilities and benefits of the asset.
What are the disadvantages to joint tenancy?
There are also disadvantages that you should be aware of. Both owners will share responsibilities and will have constant access to the asset. This means that it’s especially important to choose someone who is responsible and reliable so no one takes advantage of you when owning property jointly.
Your property will also be subject to creditors if a co-owner is involved in bankruptcy or other financial difficulties. This means that the property can be taken from you, even though you’ve done nothing wrong.
Children are often unintentionally disinherited, especially if a surviving spouse gets remarried. And, there is no asset protection granted when you inherit through joint tenancy.
Take the time to carefully weigh out the advantages and disadvantages of joint tenancy before choosing this option. And talk with a qualified estate planning attorney about whether this option is best for you.