After a joint tenancy arrangement has been established, each owner has rights to enjoy and use the property.
Joint tenancy is considered an easy way to get around probate because owners have “the right of survivorship.” This means, if one tenant dies, their share is passed to the surviving owners. If a surviving tenant wishes, they can also transfer their interest to another party such as a spouse, parent, or child.
Joint Tenancy Has Some Disadvantages
While joint tenancy offers an easy and affordable way to avoid probate, it has some disadvantages. They include:
- Control Issues. Since every owner has a co-equal share of the asset, any decision must be mutual. You might not be able to sell or mortgage a home if your co-owner does not agree.
- Creditor Issues. If a co-owner has outstanding debts, their creditors could seize an interest in your home or bank account.
- Relationship Issues. Holding an asset jointly can complicate a divorce or other relationship problems. If you have a jointly held bank account, your co-owner could withdraw all of the money without your consent.
- Substitute for Will Issues. Sometimes parents nominate a child as the beneficiary of a bank account, expecting their heir will distribute the proceeds equally among their siblings. However, your heir may use your assets for another purpose.
- Marriage Issues. If you inherited a home from a parent or other loved one when you were still single, and then you get married, the home might automatically become “marital property” in the eyes of the state.
Alternatives to Joint Tenancy
Joint tenancy works for some individuals, couples, and families. However, any small dispute could jeopardize your entire estate. You might be better off establishing a revocable living trust. Trusts have many benefits over tenancy agreements, including:
- They can be revoked while you are still alive
- They let you add, remove, or adjust assets as you see fit
- They allow you to make more specific and informed decisions about inheritances
- You are entitled to appoint an impartial executor to fulfill the terms of your trust
Just like joint tenancy arrangements, a revocable living trust lets your heirs keep your legacy safe from probate.
A strong and well-written revocable living trust has other benefits, too. You could take advantage of credit bypasses and even save money on taxes while you are still alive.
Talk to an Estate Planning Attorney Today
A home is the biggest investment most people will ever make. Whether you own one house or an assortment of properties, you need a customized plan to ensure that you and your heirs get the most out of your legacy.
The Law Firm of Kavesh, Minor & Otis, Inc. has years of experience helping California residents protect their assets. Send us a message online today to schedule your initial consultation.
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