People often look for so-called “simple solutions.” This extends to the realm of estate planning.
When you hear about some of the pitfalls that go along with probate, you may start to get interested in probate avoidance on a DIY level. One way to arrange for the transfer of property outside of probate in a relatively simple manner would be to utilize something called Joint Tenancy with Right of Survivorship.
While this could be looked at as a pretty simple step to take to enable probate avoidance, it may not be much of a solution. Here’s why.
Joint Tenancy Is Co-Ownership
Joint Tenancy with Right of Survivorship is a long and rather wordy description of the condition of joint ownership.
Suppose you own your house outright. You have the right to add a co-owner to the property deed.
Let’s say that you name your son as the co-owner of your house. You want your son to inherit the home after you die, and you think joint tenancy is a simple way to accomplish this goal.
You do not really want your son to have control of a portion of the property while you are living. And, you would like to have the right to sell it if you choose to do this at some point in time. Your intention is to leave it to your son if you wind up remaining in it throughout your life.
The minute you make your son a joint tenant, he owns half the property. If he is sued and the court finds in favor of the plaintiff, your son’s portion of this property that you used to own by yourself could be attached.
A tax lien could be placed on the property if your son owed back taxes, because part of it is his. The value of his share of the property would also be in play during divorce proceedings.
Your son’s creditors could seek to attach the property as well.
If you wanted to sell the property because you needed the money for some reason, your son would have to agree. And, he would be entitled to half of the proceeds if you did agree because after all, you gave him half of the property.
Here’s another scenario. You name your son as the joint tenant, but you instruct him to sell the home after you die. You want him to distribute the proceeds among multiple family members.
From a legal standpoint, he does not have to follow these verbal instructions. The property becomes his after you die, and he can do whatever he wants to do with his property.
These are just some of the problems that can arise if you use joint tenancy as a substitute for a proper estate plan.
- What You Need to Know about Planning for Elder Care - March 21, 2023
- Can a Trust Be Contested? - March 16, 2023
- Ohio Medicaid Limits for 2023 - March 14, 2023