Joint Tenancy remains a popular form of property ownership as people tend to elect this form of ownership to avoid probate. Many of my clients stated that when they bought a house, they chose to create a joint tenancy without really going any further as to what that entails. Joint tenancy with right of survivorship means that each person owns the entire asset (undivided equal share), not just part of it. When one owner passes away, the person's share immediately passes to the other owners in equal shares, without going through probate. We’ve all been told that joint tenancy can be a simple and inexpensive way to avoid probate, and this is sometimes true.
But careful consideration should be made for the potential tax consequences and other problems of joint tenancy ownership. Here are some of the disadvantages of joint tenancy which far outweigh the advantages:
Joint Tenancy does have its advantages, such as:
Before placing your property in a certain type of ownership, I highly recommend becoming familiar with all types of property ownership and taking into consideration your objectives and consequences to your heirs.
At the age of 57, Prince died unexpectedly in his home at Paisley Park. He left fans worldwide in shock and sadness, but he also left behind his estate that is reportedly worth at least $250 million. And his could be worth even more with his posthumously sold albums. In the four days after he passed, he sold 650,000 albums (both digital and physical), according to Nielsen Music.
The questions that now remain are who will have control of his estate? Who will make the decisions about his unreleased recordings? Who will inherit his real estate? His earnings?
According to The New York Times, Prince died intestate, meaning without a will. His sister, Tyka Nelson, filed court documents with the Carver County District Court in Minnesota to request the Court to appoint a special administrator to preserve Prince’s estate until a personal representative is appointed. Shortly after, Bremer Trust, NA, a corporate trust company, was appointed by the Court, giving the company authority to manage and supervise Prince's assets and identify his heirs.
Ms. Nelson’s court petition state that Prince died without a current spouse, kids, or surviving parents. She also states in the documents that “I do not know of the existence of a will.”
If no will or other estate planning documents turn up, Prince’s surviving family members (ie. Ms. Nelson and his half-siblings) may have to go through a costly, drawn-out family battle over his financial estate and his legacy. Because of a lack of estate planning, it is likely more than half of his estate will be paid in estate taxes and legal fees in order to determine who will inherit.
Putting an estate plan is so important to protect your loved ones and to save them the time, headache, and money in handling your estate. Please make sure you and your family have some kind of planning in place in case something happens to you.
About the Author
Christine Chung, Esq.