Joint Tenancy and Avoiding Probate

The probate process can be time-consuming and expensive. It can also be very emotionally draining for someone who just lost a loved one. As such, many individuals take steps to avoid the probate process entirely to save money and to make the transition to life without them easier for their loved ones.

There are many ways that you can plan your estate to avoid probate. One of those is by holding property in joint tenancy with others, such as a spouse or child. It is easily one of the most popular means to avoid probate because of its simplicity and relatively low cost.

What is Joint Tenancy?

Joint tenancy is used most often for real estate. It allows a couple, whether they are married or not, to hold the property as common property. When one person passes, the property automatically goes to the other property holder without having to transfer the assets through the probate process.

Property that is commonly held in joint tenancy also includes:

  • Vehicles
  • Bank accounts
  • Securities
  • Stocks
  • Other valuable property that requires registration

While joint tenancy is most often used for just two people, more than two people can hold the property and have the same rights as well.

Using Joint Tenancy to Avoid Probate

When one joint owner passes, the other owners automatically receive that person’s interest in the property. There is no need to go through a Court process. This right is referred to as the “right of survivorship.”

Although the property automatically becomes the other joint tenant’s asset, you must still file the appropriate paperwork to alter registration or deeds. In many situations, you can do this by simply filing the death certificate with the appropriate entity. Your probate attorney will be able to help you with this process for any property held jointly.

The Downsides to Joint Tenancy

While there are significant benefits to having a joint tenancy with another person, there are some drawbacks as well. For example, when you own property jointly, you cannot leave your “share” of the property to anyone else in your will. Your portion of the property will automatically go to the joint property holder. There are situations where you avoid this general rule, and you should talk to your estate planning lawyer if that is something you are considering.

In addition, the shares in the property must be equal, regardless of how the property was acquired, paid for, or maintained.

Using joint tenancy to avoid probate only works as long as there are other joint owners. That is, the last surviving owner must use some other estate planning method if he or she wants to avoid probate. You also cannot avoid probate if both joint owners die at the same time, such as in a car accident.

Another serious downside is that if one of the joint owners becomes incapacitated for any reason, the other owner may not be able to do anything with the property. You can avoid this type of situation by creating a durable power of attorney for both owners.

If you have questions about this estate planning tool or others, contact Biddle Law today to set up a free consultation.