It is said that a little bit of information is a dangerous thing, or something to that effect. This definitely enters the picture in the field of estate planning, because people often hear bits and pieces of information that contain shreds of truth.
However, they do not understand the big picture. As a result, they sometimes take important actions that come around to bite them in the future. The decision to use joint tenancy as an estate planning solution is one of them.
Joint tenancy can be used to facilitate the transfer of your home to someone else after you pass away. If you are wondering why you would ever want to do this instead of just naming the person in your will, it is related to the process of probate.
When you use a last will, you would name an executor to serve as the estate administrator after you are gone. This individual or entity would not have the ability to distribute the assets in accordance with your wishes without supervision.
Under California state laws, the will would be admitted to probate, and the court would be involved throughout the process. This court would determine the validity of the will, and if there were any challenges, they could be presented during probate.
Creditors are given a certain amount of time to come forward during probate. Assets are prepared by the executor for eventual distribution to the heirs, so appraisals and liquidation will often be necessary. This adds to the time consumption, and property does not sell overnight.
It can take eight or nine months to a year for a typical case to pass through probate, and the heirs do not receive their inheritances until the estate has been closed by the court. This is one drawback, and there are also expenses that accumulate, and they can be considerable.
When people learn about these pitfalls, they often look for ways to get assets into the hands of their loved ones outside of probate.
You could potentially add someone to the title or deed of your property as a joint tenant. This condition comes with right of survivorship, so if you do this, after you die, the surviving joint tenant would assume full ownership of the property.
The transfer would not be subject to probate, so many people think that this is a very simple, streamlined solution. This may appear to be the case on the surface, but there are some major negatives that can enter the picture.
Joint Tenancy Is Risky Business
When you make someone a joint tenant, they own half of the property immediately after you take this action. This is something that the people that recommend joint tenancy may not mention, because they aren’t aware of it.
If the person that you choose was to run into legal or tax problems, the portion of the property that they own could be attached.
You may say that the joint tenant is responsible, but an honest mistake made behind the wheel of a motor vehicle in a single moment can result in a life-changing lawsuit. A job loss or a medical condition could create an untenable situation for a person that has always made good financial decisions. Legal troubles with financial ramifications could follow.
This is one drawback, and but there are others. We have prepared an in-depth report that takes a close look at the subject, and we encourage you to take some time to read it if you would like to learn more about joint tenancy.
It is being offered free of charge, and it is contained within a library of special reports that cover many different important estate planning and elder law topics. You can access any or all of them, so feel free to look around and take full advantage of these resources.
We Are Here to Help!
Our doors are open if you would like to discuss your estate planning goals with a licensed attorney. We would be more than glad to get an understanding of your situation and make the appropriate recommendations. You can set the wheels in motion if you send us a message, and we can be reached by phone at 310-337-7696.