I speak to a large number of various groups about estate planning – both through seminars we present and to individuals that call in or come in to our offices. I often get questions or comments from widows or widowers who think they have met their estate planning needs by putting one of their children on the deed of their home as Joint Tenants with Right of Survivorship. Simply speaking, this means that when the parent dies, and their death certificate is recorded, the house immediately belongs to the child. No probate and no problems…right? Well things may transpire that way and they may not. Here are some of the potential problems with Joint Tenancy and why we often recommend that our clients avoid using it.
First, in this situation both the parent and the son or daughter now own full rights to the home. This is not 50/50 – both have 100% rights to the property. Because of this, if the son or daughter get sued, guess what is asset is exposed? That is right, the parent's home is now at risk in their child’s lawsuit. Clearly this was not the intention of either the child or the parent but simply is one of a number of unintended consequences.
Here is another example for which I will use the fictional couple John and Mary. This lovely and rather fictional couple have been married for over 40 years and have two fictional children, David and Samantha. Unfortunately, Mary struggles for a time with an illness and passes away. Several months later John, wanting to avoid probate on his home, decides to add his son David to his deed as Joint Tenant with Right of Survivorship. A few years go by and John meets someone new and remarries. While John’s children are happy for their father and like their stepmother, they of course do not have the same relationship with her as they did with Mary. After a couple of years John and his new wife decide to move to Hawaii to enjoy the rest of their life in paradise. John goes to David to have him sign the deed so he can sell the house for the funds to move. David is apprehensive about his Dad moving and refuses to sign. Additionally, he claims that the house is part of his inheritance and therefore does not want it sold. Can David legally prevent the sale of his father’s home? The answer is yes, because he has full rights to that property by being made a Joint Tenant.
Often when we try to do things on our own we can create unintended consequences that may have significant impacts on your way of life. Taking the time to create a proper estate plan with a Living Trust is the best way to avoid probate while still giving you the flexibility and full control to deal with the many changes that happen in your life and your circumstances.
For more information, schedule a free consultation with an MH estate planning attorney by calling 888.222.1328.
Contributed by MH Flagstaff, Cave Creek and Phoenix Estate Planning Attorney West Hunsaker.
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This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.