Joint ownership for a husband and wife is usually recommended. Yes, it will usually avoid probate, especially for spouses. In most cases, it will immediately transfer the property to the surviving spouse.
Where the problem usually occurs is when there is joint ownership between a parent and child or other person. Yes, it may avoid probate (at least in part), but you have actually given up control and have possibly opened up the property to someone else’s liability or legal action!
What if you put your child’s name on your deed and they get a divorce, they are in an accident and it ends up being their falt. What if they need to claim bankruptcy. That account is partially theirs and may be an asset in danger! There are better options! Consider a second opinion if your current attorney or advisor recommended you to put your kids (or anyone elses) name on your account!
There is something called “Unintentional Disinheriting.” This is when you may have been married before, and now your second spouses name is on the deed. You wanted the family home to go to the kids, but the spouse now has 100% rights to it and your children may never see it…you have unintentionally disinherited your children. This also includes other assets such as bank accounts, accounts with beneficiaries like 401-k’s, IRA’s, Brokerage accounts, Stocks, and more! This is only one scenario that this may occur….there are many more!
The chance of a Potential Law Suit is on the rise. With just your name on the deed or title, you are the only one that could be liable to a law suit. When someone else’s name is on the deed or title, “joint ownership,” you are now exposing that asset to their chance of a law suit of someone else! And for every other person on that deed or title, there is a greater chance of having the asset exposed to loss.
You can really end up in a mess if your joint owner becomes mentally or physically incapacitated (or worse yet die), and can no longer sign their name, especially if real estate is involved. You will have to get approval from the probate court (living probate), pay the appropriate fees for the lawyer and courts service before you can sell or refinance the jointly owned property.
What if your child (or other person you’ve chose to put on your asset) predeceases you? You man have to pay inheritance tax to get your asset back?
These are only a few reasons joint ownership may not be the right choice for your estate plan. Sometimes taking an easy way out doesn’t work……..These illustrations DO happen or we wouldn’t be bringing the potential problems up!
Is Joint Ownership really worth the RISK?
Joint ownership may work for you, but then again, maybe it won’t! Are you willing to risk the liability to loss of control or worse yet, loss of the asset with joint ownership when there are other options that will work to protect the asset from probate or creditors without the risks of joint ownership?
IT’S YOUR CALL!