When it comes to estate planning, one should always be aware of the possibility of losing control with joint ownership. At Reinfeld & Cabrera, P.A. we want you to understand that while joint ownership may have some important benefits, there are some aspects that can cause a lot of problems later on.
Joint ownership, also known as joint tenancy, with right of survivorship is the most common form of joint ownership. For example, in most marriages most assets are owned jointly. Joint ownership with the right of survivorship is different to other types of joint ownership with one important defining feature – if one partner in the joint ownership dies, ownership is automatically transferred to the other partner(s). This can be seen as both a blessing and a curse. It is a blessing because property shared through joint ownership does not undergo the probate process, thus eliminating some major expenses. The only exception is if there is no other partner for the property to go to (if, for example, both die at the same time or if the last owner does not declare another joint owner before their death) in which case the property will be subject to the probate process.
The real problem comes in with the fact that property transferred through joint ownership to any remaining partners is not controlled by any wills because transfer of property takes place immediately upon death. The asset is now completely under the control of the surviving owner/s and they can do whatever they please with it. This could result in you unintentionally disinheriting your own family. This happens most often when siblings are in joint ownership. If one dies the property will not be inherited by his family regardless of what his will may say, exceptions may apply. But when the second/last owner dies the property will then be inherited by her family. Scenarios like this can happen to any family (even blended families with children from separate marriages for example) and are becoming an ever-increasing problem.
Some other problems that may occur with joint ownership include gift and income tax, the increased risk of being named in a lawsuit and of losing the asset to a creditor, limiting your tax planning options, the difficulty of removing unwanted co-owners, the court becoming a “new” co-owner if your partner becomes incapacitated etc.
While the benefit of avoiding probate may be a big draw card to many people, an experienced attorney will always make your aware of any potential dangers and how you can avoid them with proper estate planning. Call Reinfeld & Cabrera, P.A. today for a free estate planning consultation to see how you can avoid losing control of your assets.