What is joint tenancy? How can it be an estate planning tool?
Joint tenancy is a way to share ownership of property. If one of the joint tenant owners dies, their name is taken off title leaving ownership in the surviving joint tenant owner(s) name(s).
Joint tenancy is an estate planning tool. If property is transferred, while you are alive, from yourself solely to yourself and intended beneficiary(ies) as joint tenants, then when you die that property is immediately left solely in the names of your beneficiaries without the need for probate.
Joint tenancy is also a tool for avoiding a will variation claim by a disinherited child because a will variation claim can be made only against an estate to challenge the provisions of a will. With joint tenancy, the property passes directly to your intended beneficiary without becoming part of the estate.
There are risks to using joint tenancy as an estate planning tool that arise from putting your property in the name of an intended beneficiary before you die. Risks include, but are not limited to, the intended beneficiary inappropriately dealing with the property, creditors or ex-spouses of the intended beneficiary claiming against the property, a loss of sole control over the property and tax issues.
Relevant Legal Articles:
- Probate, its cost and how joint ownership can avoid it
- Risks of using joint tenancy to avoid probate
- TAX WARNING! Capital gains triggered on death and implications on joint tenancy estate planning tool
