There are numerous different ways that you can facilitate future asset transfers. The best course of action will vary depending on the circumstances. You should certainly discuss things with a licensed estate planning attorney so that you can make fully informed decisions.
You may hear about so-called “simple solutions.” They can sound great on the surface, but when you dig a little bit deeper, you see some potential drawbacks. With this in mind, let’s look at joint tenancy with right of survivorship.
Co-Owner of Property
Joint tenancy with right of survivorship sounds like a rather fancy arrangement, but it is quite a bit simpler than it sounds. A joint tenant is a co-owner of property. For example, you could add your son to the title of your home, and he would become a joint tenant.
The joint tenant would own half of the property as soon as you add him to the deed or title. Because of right of survivorship, he would inherit the entirety of the property after you pass away.
This transfer would not be subject to the legal process of probate. If you were the sole owner of the property at the time of your death, and you transferred it through the terms of a last will, the transfer would be subject to probate.
Probate is not inherently negative, and it provides certain protections. However, it is time-consuming, and the probate property cannot be transferred until after the process has run its course.
Joint Tenancy Drawbacks
Before you decide that joint tenancy is for you, there are some drawbacks that you should take into consideration. As we mentioned in the previous section, the joint tenant would own half of the property right away. This can be risky on a couple of different levels.
If you wanted to sell the property, you would need the approval of the joint tenant. Plus, the joint tenant would be legally entitled to half of the proceeds.
In addition to this, the joint tenant’s legal problems would become your problems. If your son was the joint tenant and he was sued, his portion of the property could be attached. Tax liens could also be placed on the property, and the property could be in play during divorce settlement negotiations.
Thirdly, let’s say you want to “keep it simple.” You want the joint tenant to sell the property after you die and distribute the proceeds among multiple different family members. The joint tenant may honor your wishes, but from a legal standpoint, the joint tenant is not compelled to follow these instructions.
Free Report on Joint Tenancy
We have a valuable resource that is available to you free of charge if you would like to learn more about joint tenancy. Our firm has prepared a special report on the subject, and you can obtain access to your copy through this link: The Trouble With Joint Tenancy.
Joe Masiuk, Estate Planning Attorney
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