Property held in joint tenancy is a convenient way to ensure that it remains in the right hands after an owner dies. However, some people use joint tenancy as their sole estate planning tool. This is a shortsighted choice that can put your family in an uncomfortable and expensive position when both co-owners pass away.
If you’ve relied on joint tenancy as an estate planning tool, it’s time to set aside some time to create an estate plan that fits your goals. Call Haygood, Cleveland, Pierce, Thompson & Short at 334-821-3892 to set up a consultation now.
Benefits of Joint Tenancy
Joint tenancy can be a useful tool, especially for married couples. Property held in joint tenancy is owned equally by both parties. When one owner passes away, that owner’s portion becomes the property of the other owner. Property held in joint tenancy does not have to go through probate, which can save grieving family members time and money.
Consider, for example, a married couple with a retirement fund, savings account, and home. If all of those assets are owned by both parties, it makes sense that the surviving spouse keeps them all. Their need for a home and funds doesn’t disappear simply because their partner died, so it doesn’t make sense for all of those assets to go through probate and be stripped from the remaining owner.
Having said this, joint tenancy falls short in many ways, highlighting the need for a thorough estate plan.
Leaves Family in the Lurch
Joint tenancy as an estate plan is essentially a quick fix. At some point, the other owner of the property will also pass away. At that point, the assets will have to go through probate and be dispersed among heirs. The joint tenancy didn’t protect the family from the stress and expense of probate, it simply delayed it.
Issues Between the Joint Tenants
If issues arise between the joint tenants, everyone suffers. Look at a jointly owned home as an example. A couple jointly owns a home. One partner passes away. The surviving partner adds their only child to the home’s title, making them joint tenants. The child decides that they want to sell their half or have their parent buy them out. This is an obvious misuse of joint tenancy and not what the parent intended. However, by adding their child to their home title as an equal owner, they have given them the freedom to take advantage of the situation.
When Both Owners Die Together
Without a more detailed estate plan in place, joint tenancy allows for smooth transfer of property only if there is a surviving owner. If both owners pass away at the same time, the property is suddenly left ownerless. Surviving family members are left scrambling, trying to figure out how to take care of the property and protect it while it goes through probate.
This is particularly challenging in the context of a home or other asset that requires maintenance. If a property is going through probate, who pays the home’s bills, does house repairs, and takes care of the lawn during the process? Until an executor is named and given the freedom to care for the estate, the asset can fall into disrepair.
Issues With Blended Families
If one or both owners have children from a previous relationship, they can be left without any inheritance due to joint tenancy property. Imagine this scenario. A couple is married. One partner, who has two children from a previous marriage, passes away. All of his assets are jointly owned by his spouse. They pass to her. Upon her death, those assets are divided among her children.
The other owner’s children from the past marriage receive nothing without a more detailed estate plan. This can cause significant discord and even cause the breakdown of a previously strong family unit.
Start Your Estate Plan with Haygood, Cleveland, Pierce, Thompson & Short
If you own property with your partner, make sure that you aren’t relying on joint tenancy as your only estate plan. There are lots of estate planning options available to you, and we’re here to help you. Call us at 334-821-3892 or to set up a consultation.