People ask this question often of us and our answer always is, probably not. Joint tenancy is the most common estate planning device, whether exercised consciously or unconsciously. However, for most people, it is not a good arrangement for the following reasons:
- You must get the consent of the other joint tenant(s) to refinance or sell a property.
- If the other joint tenant gets sued, you can lose your asset.
- While joint tenancy avoids probate on the first death, probate will probably be required upon the second death.
- Joint tenancy assets are subject to the lengthy and expensive processes of conservatorship and guardianship in the event of a disability of a joint tenant.
- Assets held in joint tenancy do not get a full step-up in cost basis upon the first death, resulting in potential capital gains taxes upon the later sale of the assets.
The ideal plan is to hold assets within a living trust. Married couples would hold assets as community property within the trust.
Contributed by MH Phoenix, Arrowhead and Scottsdale Estate Planning Attorney and Partner David T Eastman.
About Morris Hall:
At Morris Hall, we have focused our legal practice on estate planning for over 40 years. Along with estate planning, our attorneys help clients and their families with matters of probate, trust administration, wills, power of attorneys, business planning, succession planning, legacy planning, charitable gifting and other important legal aspects. We also have divisions in financial, real estate and accounting to help you incorporate all of your planning together, ensuring that everything works perfectly for your needs and situation. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Cave Creek, Tucson, Prescott, Flagstaff and Arrowhead. Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe. Contact us today at 888.222.1328 to schedule an appointment!
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.