In California Joint Tenancy is an extremely popular method for couples to co-own property largely because it has a built in “Right of Survivorship”. On the surface this may seem like a great idea because if one owner dies the other has the property automatically passes to the survivor. There is typically no requirement or need for Probate or for a lot of attention or the cost of an attorney. At least this is how it appears on the surface.
However good or bad the idea of Joint Tenancy, it is not a substitute for a well thought out and legally drafted Estate Plan. In the absence of an Estate Plan if one of the owners die, any property they have in joint tenancy will pass in total to the survivor. It gets even worse if both owners die with property in Joint tenancy. In those situations the property could be subject to the states rules of Intestacy. Are you comfortable knowing that the state could ultimately decide what happens to the assets you have spent your life working for?
Holding property in Joint Tenancy can also be exceptionally risky for married couples due to tax, health and divorce concerns. If one of the owners die, the survivor may be subject to what is known as step-up-basis capital gains tax which may result in them not being able to remain in the property. In the case of a mental condition like dementia the court may decide that the property could not be sold as long as one or both are incapacitated. The problems that can rise up during a divorce include one party refusing to sign off on the property and even worse when one party dies during the proceedings. No matter what your situation is Joint Tenancy is frequently the worst method to hold title and does not eliminate your need for a well thought out and executed estate plan.
The Law Offices of Quinton J. Miller is a general practice law firm with an emphasis on Estate Planning and serves clients throughout Sacramento and Northern California. We assist clients with estate and long term care planning, and small businesses with transition planning, litigation, and general business needs. For more information or to schedule a consultation, please contact us at (916) 714-1717 or visit our website at http://www.quintonlaw.com.