In its simplest terms, a joint tenancy with right of survivorship is an asset owned by more than one person, with each having equal say and ownership of that asset. Often, it’s a house, but it’s not limited only to that kind of asset. When one of the owners die, the other joint owners maintain ownership. A joint tenancy with right of survivorship for many is crucial and should be included in each of their estate plans. In most instances, this usually means a married couple. While it’s sounds a bit convoluted, the truth is, establishing this type of protection is both easy and affordable. But is it right for you?
While there are many smart reasons for these legal documents, there are a few disadvantages. This week, we explore both.
The Benefits of Joint Tenancy with Rights of Survivorship
These documents basically keep the red tape from overwhelming the surviving person. This is done via a simple legal process and is completed outside of probate – which is the biggest benefit. Remember, because the totality of the probate process is time consuming, a joint tenancy, when properly created, removes it from that estate review. It doesn’t require going through the division of assets and payment of liabilities.
It also means there’s no need for recording the deed to create the tenancy. This is often a buffer of sorts as it maintains privacy, which can ensure anyone objecting the transfer doesn’t have the benefit of advance notice.
Many believe the biggest disadvantage is its permanency. It’s irrevocable and it is, for tax purposes, considered a taxable gift when the deed is executed. If a joint owners loses the property because of a debt, divorce proceeding or other issue, there is a little or no recourse for the remaining joint owners.
Many parents name one of their children as a joint owner of a bank account or other asset. Typically, it’s a convenience so that someone has access to cash should the parent need it. What many don’t realize, however, is that adult child’s creditor can come after those assets. It matters none that the child contributed nothing to those assets; the creditors will pursue it – up to and including selling to recoup their money. That’s not always the case, but if you have any concerns about the responsibility of one you’re considering to add, it’s a good idea to explore it further with an estate planning professional.
As you might expect, there’s much more to the joint tenancy with right of survivorship, with no two situations or sets of circumstances ever the same. It’s one more reason why seeking out an experienced estate planning lawyer can only be a good thing as you plan for your future. If it turns out this isn’t the right financial tool, your lawyer will be able to provide alternatives.
These are ideal for many, but for others, it’s simply not feasible. In those instances, other planning tools, such as a revocable living trust, might provide better flexibility while also allowing for changes. They too can provide protection against probate while preserving both federal and estate tax exemptions.
We invite you to contact our office today. The DeBruyckere team of legal advocates stands ready to assist in any way you need. We can help you understand the benefits of joint tenancy with right of survivorship in Beverly as well as the potential pitfalls for your estate planning effort. Call us today to schedule a complimentary consultation.