You can own property with another person and title it as “joint tenants with rights of survivorship” and not as “tenants in common”. This means the title is held in two or more names and contains the magic words “joint tenants”. This form of ownership instantly and automatically transfers property at death to the surviving owner(s). It’s not the fact that there are two or more names on the title to the property that makes this work. It works due to the magic words joint tenancy. If the magic words are not present, then this method will not work. The law presumes that you did not intend to create a joint tenancy if this is not the case. The account is titled something similar to “U.B. Smart and I.M. Smart, as joint tenants with rights of survivorship.”
- With this form of ownership, no lawyers are usually needed at death.
- Property does not have to go through the “probate court” at death.
- It is simple to understand and set up.
- It is an inexpensive planning tool.
- The property transfer is instant and automatic at death.
- Joint tenancy does not apply to all property types.
- It is an item-by-item plan. The title to each asset must contain the names of the co-owners and the magic words must be present. Every time you change your mind you have to change the title to all of the assets involved.
- Because it is so simple and easy, joint tenancy has the potential for misuse.
- It should not be used instead of a durable general power of attorney to gain help in paying your bills.
- It can require the consent of all owners to deal with the property. You would have to get your children’s permission to cash-in or sell an investment if one or more of them are on the title.
- Joint tenancy property may be subject to the creditors of each of the owners. This means that a garnishment intended for one of your children may tie up your property.
- Joint tenancy property may become entangled with property division by a divorce court of any owner. A lawyer can usually extract it from the court, but it will cost time and money.
- Joint tenancy can have disastrous Federal Estate Tax results in some situations.
- Joint tenancy carries with it no protection for minors. The minor cannot legally deal with it, and it may require that a “conservator” be appointed to deal on behalf of the minor.
- Your intended beneficiaries may get left out or cut out if you die before the other joint tenant dies, such as a second spouse with his or her own children.This would leave out your children or grandkids, and leave it all to the surviving joint tenant’s children at his or her death
- It works rather well for passing property between husband and wife with estates that are not taxable. However, it can cause problems if either joint tenant becomes mentally incapacitated There are better methods of how to title property, such as revocable living trust planning.