When two people own property in common, they often title it in joint tenancy. This is especially true for married couples. However, there might be alternative ways to title the property that could be better for estate planning purposes.
Holding property as joint tenants with right of survivorship is very common. When two people hold title to property that way, if one of them passes away, then the property automatically becomes the sole property of the other joint tenant.
This has benefits for estate planning, as the property does not have to go through probate. However, there are potential drawbacks. If one of the owners is in debt, his or her creditors may be able to go after the property held jointly. If a parent holds property as a joint tenant with a child, it might make it so other children do not receive a fair inheritance.
Recently, Investor's Business Daily discussed alternatives to joint tenancy in "Best Ways To Title Your Assets — Avoid Traps," including:
- Convenience Accounts – Sometimes an elderly parent will want a child to be able to pay the parent's bills. The temptation might be to add the child to a bank account as a co-owner. This is often a mistake. In some states convenience accounts allow the parent to remain as the sole owner of the account while adding the child as a person who can withdraw funds from the account and write checks.
- Tenants in Common – Property can also be held as tenants in common. Unlike joint tenancy, each owner's share of the property is kept separate and does not automatically pass to the other owner upon death.
If you have questions about these or other alternatives to joint tenancy, consult with an estate planning attorney. You can learn more about this topic as well as other strategies on our website under the tab entitled: estate planning in Virginia. Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning. However, proper estate planning is not a do-it-yourself project. Why not call us for a complimentary consultation at 757-259-0707.
Reference: Investor's Business Daily (October 23, 2015) "Best Ways To Title Your Assets — Avoid Traps,"