There are many common misconceptions about estate planning. This posting will look at Joint Tenancy property ownership and how it relates to your will.
Joint tenancy is where you set up the ownership of real estate or an account to be in your name along with one or more other people. This involves a current transfer of an ownership interest in the account or property. You are no longer the sole owner of the account or property. The other owner(s) have the same rights as you.
Many people think that if they own a piece of property or an account with someone else as a joint tenant that they can still change who that property goes to at death by making a will. Nothing could be further from the truth.
When something is owned by multiple people as joint tenants, the interest of the deceased owner vests as a matter of law in the surviving owner(s) when one owner dies. This means it happens automatically at the time of death. This change of title is official when proof of the death is given to a financial institution where the jointly owned account is held. In the case of real estate it is made official by filing an affidavit with the Recorder’s Office of the county where the land is located. That affidavit says who the owners were before the death and proves the death by including an official, ” raised seal” death certificate.
The effect is to pass legal title directly by operation of law, which means that the interest in the account or property does not pass under the decedent’s will. No matter what the will says, the share in the account or property owned by the deceased person passes to the co-owners.
Joint tenancy titling of accounts and real estate can be an appropriate tool for estate planning. It is attractive because it is easy to set up and doesn’t require much if any assistance by a lawyer. But joint tenancy has multiple pit falls and is a trap for the unwary. The inability to control jointly owned property under a will (or a Living Trust) is but one issue. Imprudent use of joint tenancy can defeat an estate plan and cause unintended results.
If you want to avoid potential family feuds, be careful about what property you hold in joint tenancy. Ask an attorney how to change it, if you do not want the joint tenant to get it all.
To learn more, you can obtain a free report called “The Trouble With Joint Tenancy” from our website, www.zimmerlawfirm.com.