Protecting assets such as your home requires careful consideration, as the most obvious solution may not necessarily be the most advantageous.Consider a scenario where your spouse has passed away, and your children are grown. Instead of getting remarried, you invite your new companion to move in with you. Concerned about the complexities of marriage impacting your estate, you later decide to put your partner’s name to the deed of your house. While this may seem like a practical solution, there are alternative methods to achieve the same objective.
Joint ownership, also known as joint tenancy, involves adding a name to an asset, ranging from properties to bank accounts and investments. In joint tenancy, both parties have equal ownership rights, allowing the property to bypass probate and transfer directly to the surviving owner upon death.
This arrangement offers several benefits, including avoiding probate fees, sharing responsibility for the asset, and simplifying the inheritance process.
However, joint ownership also presents challenges. Important choices require agreement from all owners, which can be troublesome in unstable relationships. Furthermore, in order to resolve financial disputes, bank accounts held jointly may be frozen, limiting access to money. Moreover, ownership of the asset automatically passes to the remaining owner or owners upon death, removing the deceased’s ability to manage the asset or transfer it to other beneficiaries.
Given these complexities, some view joint tenancy as risky. An alternative approach is tenancy in common, where each owner holds a fractional ownership share. This gives the surviving owners authority over their shares while allowing the deceased owner to leave their part to a successor, allowing for greater flexibility.
Considering your goals and preferences, it’s essential to weigh the advantages and drawbacks of joint ownership carefully. To explore the best estate planning options for your situation, consult with our experts today.