A common piece of advice offered by estate planning lawyers is that various advantages can be realized by owning property jointly. In reality, joint ownership offers several advantages for surviving family members. Instead of viewing joint property ownership as an answer to every estate planning challenge, however, it is a good idea to be aware of the challenges and issues involved with such an estate planning technique.
There are Two Types of Joint Ownership
Joint ownership requires more than one party having interest in a property. For married couples, there are two options regarding how to jointly structure ownership of property:
- Joint tenancy with the right of survivorship is the most common type of joint property ownership. Titling assets in such a way often means that the property will be used for a personal residence. Structuring property in such a way means that either spouse can sell their share of the property without obtaining the other’s consent.
- In property that is structured as tenancy by the entirety, one person owns his or her share of the property without the involvement of the other. Structuring property this way provides better creditor protection. In New York, unless the deceased individual who owned the property specified otherwise, home residences are classified are separate transferable rights.
Appreciate the Advantages of Joint Property Ownership
The primary advantage of joint ownership is that property can avoid probate, which can be a timely and costly process. By the time the probate process has concluded, the estates of many individuals end up being distributed in a manner that they did not intend.
Acknowledge that Joint Property Ownership Has Downsides
Joint ownership of property is a convenient method of establishing ownership rights, but the method of titling property in such a way presents challenges. Some of the most substantial disadvantages to joint property ownership include:
- If any party other than married individuals enter into joint ownership, this generates a taxable gift. An exception exists, however, if each person contributed his or her own assets to obtain a share of the title.
- Given that gift tax liability is currently $15,000, the risk exists that a gift passed on might exceed the exclusion amount. In these situations, the gift can still be sheltered from estate taxes.
- Property that avoids probate can still be included in a taxable estate. To avoid both estate tax and probate, a person must relinquish all interests in a property, which includes both control and ownership of assets and benefits.
Speak with an Experienced Estate Planning Attorney
Joint ownership of property is a valuable method of achieving estate planning goals. This method helps to avoid various challenges, but it is not a solution to all problems. To make sure that your estate plan achieves each of your goals, contact an experienced estate planning lawyer. Do not hesitate to contact attorney Jim A Lyon for assistance.