The Benefits and Disadvantages of Joint Tenancy
Personal Injury Lawyer
No matter where you are in your life or what types of assets you have, an estate plan is crucial. When you start to investigate estate planning, you will find that there are more vehicles for estate planning than wills and trusts. Joint tenancy is a form of property and asset ownership. In this kind of ownership, two or more people own the property or asset in question. There is an agreement on how much each person owns and then upon the death of a party, the survivor claims that share.
Is this type of ownership for everyone?
How Joint Tenancy Works
Often, married couples or business partners will become joint owners in property or assets. In some cases, a parent may choose a child as a joint tenant. As joint owners, both parties enjoy and benefit from the asset. Then, if one person dies, there is a direct transfer of the said asset to the other party involved. For instance, if you pass away before your spouse, your spouse may receive the family home and assets. Likewise, he or she will also incur any debts.
Benefits of Joint Tenancy
One of the major benefits of joint tenancy is the ability to avoid probate. When someone begins the estate planning process, one of the biggest concerns that he or she has is probate. Probate can be a long, expensive process. It’s inconvenient to the survivors because it can take anywhere from five months to a year for the assets to be distributed. In joint tenancy, there is a straight transfer of assets from one party to the other.
Disadvantages of Joint Tenancy
One major problem with joint tenancy is when the two parties do not have a separate estate plan. After both parties pass away, what happens to the assets? These assets may go intestate. This means that the court would have to divvy up the assets according to state law. This can be a major problem if the two parties die at the same time. Another disadvantage is if you want someone else to inherit some of your property, you do not necessarily want to count on another person to ensure that asset gets into the right hands.
To own your property jointly can be a good estate plan for some couples or business partners. This probably shouldn’t be your only estate plan, however. To find out more about the benefits and disadvantages of joint ownership, set up a consultation with an estate planning lawyer, such as Patterson Bray.