Problems with Assets Passed Through Joint Tenancy

Joint tenancy is a form of ownership under which two or more parties share equal rights in property.  Upon the death of one of the parties, or “tenants,” the survivor’s interest in the property continues.  Titling assets in joint tenancy is popular because it is a simple way to pass assets; however, there are several issues or potential problems a tenant may encounter.

Holding an asset in joint tenancy does not protect the asset from tenants’ creditors.  If a judgment is levied against any one tenant, the entire value of the asset could be used to satisfy the judgment.  This can pose lifetime, as well as post-mortem, problems.

Joint tenancy may also generate gift tax issues.  The creation of joint tenancy in real property may be viewed as a taxable gift by the IRS.  Cash assets (i.e. joint tenancy bank accounts) may become gifts when funds are withdrawn by a non-contributing tenant.  Understanding applicable tax law is crucial when creating this type of interest.

There are several other tax and practical implications to consider when creating a joint tenancy interest.  The nature of the asset, as well as the financial standing and relationships among tenants are all important considerations.  The attorneys of Morris Hall are experienced in these types of property transfers and offer free consultations to discuss your estate plan.

Contributed by Morris Hall Phoenix Estate Planning Attorney Andrea Claus.

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You have a number of options when it comes to estate planning, so why pick Morris Hall?  First off, estate planning and asset protection are a very complicated endeavor and you should only trust someone who focuses exclusively on those matters.  Also, MH is a proud member of The American Academy of Estate Planning Attorneys (AAEPA) which provides us additional support, advanced training, tools and information that is not available to others – which means that we can better protect your assets and your loved ones.  We are one of only two firms in Arizona that belong to the AAEPA and are the only firm in New Mexico that has been granted membership.  If you have assets and loved ones that you want to protect, you are in good hands with Morris Hall.  Contact us today at 888.222.1328 to schedule an appointment!