Joint Tenancy vs. Proper Estate Planning

Joint Tenancy is not a Replacement for Proper Estate Planning.

1. Tax consequences:

2. Loss of control: By adding owners to a title, the original owner loses exclusive control over the property. If the original owner wants to sell or re-gift the property, the new owners may not agree. The original owner would then have to sue the new owner (and win) before taking the desired action. In addition, with some types of property (i.e., a bank account), a new owner could take all the property, contrary to the original owner’s intention.

3. Potential litigation: Adding new owners to property subjects the property to the new owners’ creditor claims (including bankruptcy) and claims from divorcing spouses.

4. Minors cannot own property: Adding owners to a title does not work if the intended beneficiaries are under age 18, or otherwise younger than the age at which you would prefer giving them full control over property.

5. Ignores incapacity planning: If the original owner, or any of the new owners, become incapacitated, and no durable power of attorney was executed, a conservatorship proceeding will be required.

6. Merely delays the inevitable: Even when new owners are added, this does not prevent all the owners from dying in a common accident, or the last owner from eventually dying. At some point in time, probate will likely be required.