ARE YOU CURRENTLY IN IN A JOINT TENANCY AGREEMENT?
So, as a couple you want it to be all in and team work; you buy a property and happily sign the deed as a joint tenants. You could be newlyweds, divorced, re-married; straight or an LGBTQ couple. It does not matter how you met your significant other; your property is now in joint names; everyone is happy and the house warming party is planned. Well, here is the reality of what you just did….
Joint tenancy in California has pros and cons. The simple definition of a joint property is when two people buy a property and both parties are on the contract. What does this mean? to us as attorneys? Technically speaking, when one spouse dies, the surviving spouse or partner inherits the whole property; 100%. In theory this sounds perfect and some people think it is a great way to avoid probate. If all goes well, it can be perfect, but it can also create a lot of problems and chaos for the family. Unfortunately, it is rarely a peaceful solution … especially with today’s blended and LGBTQ families. In these types of situations, there are many things to consider with inheritance planning and asset distribution.
An attorney or accountant may see the potential threats as obvious, but it is important that families see them also. A consultation at the www.VelascoLawGroup.com will explain these pitfalls clearly.
It may look great on paper to have equal ownership and to avoid Probate. However, should one person die, here are some things to consider:
With joint tenancy agreements, the surviving spouse is likely to pay higher taxes should the house be sold in the future.
Joint tenancy takes away the control that a living trust provides, should one spouse become incapacitated.
If one spouse dies, the other spouse has 100% control over the asset. This could result in the children or grandchildren of the deceased being left off of the inheritance list!
If the surviving spouse remarries, the children from the first marriage may be unintentionally disinherited if the new spouse outlives the surviving spouse.
What about if the surviving spouse feels generous and adds one of the children as a joint tenant? This can also cause a lot of grief for the children should the property suffer any claims, implicating the children and/or grandchildren e.g. unpaid medical bills. Everyone loses at this point.
This all sounds terrible and can be very painful. Here are some steps you can take immediately to avoid winding up here. Review your tenancy agreement and if you need help, make an appointment with our team of attorneys. If you have an estate plan or a living trust, bring them to your initial consult. We will review your documents and provide you with clarity and a constructive ways to move forward. In reality, there isn’t really any good reason for having a joint tenancy. Is there another way? YES! One solution is to put the property in a living trust, providing a survivorship and inheritance path, which is a win win. can be beneficial to all involved.
Velasco Law Group is an estate planning and Litigation law firm, with offices in Long Beach, Downey and Irvine. The firm is able to provide legal consultations in both English and Spanish and has a stellar reputation for its humanitarian work in the community. For more information contact the office HERE