In a previous blog we talked about a couple, Mae and Roy, who had Joint Tenancy for their major assets – and we gave an example of why this may not always be a good thing.  The bottom line there was, when they passed away, their children didn’t get a penny from a sizable estate whose assets were jointly owned.

While we love to share our assets on paper with our significant others, there are pitfalls associated with Joint Tenancy, especially after the second party passes.

However, there are ways to avoid such pitfalls, especially if one puts into place a Living Trust as part of their legally-binding Estate Plan.  Such planning steps have other big advantages also, such as reduced taxes, better protection of assets, avoiding “Probate” (the courts) and ensuring that specific wishes for your heirs are carried out.

Just so that you have a better understanding of how Joint Tenancy can affect couples, the first thing you need to know is that Joint Tenancy as a planning device for your estate is not in the best interest of most couples:

• Now, and through 2012, there is an estate tax exemption of $5 million dollars
• However, in 2013 that exemption is going to drop down to $1 million
• In order to be able to take advantage of those exemptions, you need to have a proper Estate Plan in place because Joint Tenancy will not allow you to take full advantage of the exemptions
• In the case of the $1million exemption in 2013, a married couple could actually claim two exemptions ($1 million each) if the couple does not have certain Joint Tenancy arrangements

The bottom line is, proper Estate Planning is a wise move if you are married with Joint Tenancy – but you’ll need the advice of an attorney who is trained in Estate Planning.

Just to be clear, there is an “unlimited marital deduction” that does allow a surviving spouse to receive the assets of their spouse, tax free, when their spouse dies.

However, when the surviving spouse passes, there can be dramatic estate tax consequences.

This further emphasizes the importance of Estate Planning, and in securing legal advice from an Estate Planning attorney.

Co-Executor, PLLC is a member of the American Academy of Estate Planning Attorneys.

Some people choose to own property in tenants in common ownership.  With so many ways to own property, it can be confusing to understand the differences between the different types of property ownership.  Take a look at the answers to some of the most frequently asked questions about tenants in common ownership. This will help you decided if tenants in common is a good ownership option for you.  If you have additional questions, consult with an estate planning attorney.

How does tenants in common ownership work?

Tenants in common allows two or more people to have ownership of a property.  Each person will own a percentage of the property.  This does not necessarily mean that each person will have an equal share.

Each person has control over his or her share of the property and does not have control over the other shares.

What happens to my share of the property after I die?

You’re able to outline your property distribution wishes in your estate plan with the use of your will or revocable living trust.  The beneficiary who you name in your will or trust has control of your share of the property after your death.�
The other owners will still have control over their percentage of the property.

What are the benefits of tenancy in common?

This form of ownership can be beneficial because you have full control over your share of the property.  Unlike joint tenancy with rights of survivorship, you get to choose who will receive your share of the property after death.  This can be a beneficial way to make sure that you’re able to leave an inheritance to a loved one.

Joint tenancy with rights of survivorship ownership, on the other hand, automatically transfers your share of the property to the other owner after death.

If you have any questions about tenants in common ownership, consult with a qualified estate planning attorney.

Co-Executor, PLLC is a member of the American Academy of Estate Planning Attorneys.