Some people choose to own properly jointly with the use of joint tenancy. This can be a form of ownership that has certain benefits. Unfortunately, there are also issues that may arise when people choose to include this form of ownership in their estate plan. It’s important to consider both the advantages and the disadvantages before creating an estate plan. The benefit is generally probate avoidance. More disadvantages are described below.
You lose control of your assets. If you choose to own a property in joint tenancy with another individual, you lose control over the property. This is because the other individual will have the exact same level of ownership as you. You each own 100% of the property. It’s important to only co-own property with another individual who is as responsible and trustworthy as yourself and with whom you’ve had a long term trusting relationship.
Your assets are subject to creditors. If the co-owner of your assets is in financial trouble, you may also suffer. Since you jointly own property with the individual, your jointly owned assets will be subject to creditor seizure, including the IRS. This may mean that you can lose your property even though you’ve made no financial errors.
Your relationship may be negatively impacted. If you and the co-owner of your assets experience a falling out, joint ownership could be a negative and lasting strain on your relationship. This can make it extremely difficult for you to ever patch up the relationship, let alone make importance decisions regarding the jointly owned asset.
In the next blog post (part 2 of 2) more reasons are discussed why you may want to reconsider owning an asset in joint tenancy with another individual. If you have any questions, or if you’d like to discuss the use of joint tenancy and how it fits in with your estate plan, consult with an experienced and qualified estate planning attorney.