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The Trouble with Joint Tenancy
Joint tenancy ownership of property is sometimes used as a substitute for an effective estate plan. Is this a good idea? Read this article to find out.
Although Joint Tenancy offers some short-term conveniences, in the long run it poses a host of problems that can cost you and your loved ones many times the expense and headaches you thought you were avoiding.
For the vast majority of American couples, "till death do us part" also means "till death do we hold our property in Joint Tenancy."
It happens almost automatically. When you and your spouse open a checking account, buy a car, purchase a home, or acquire just about any other asset you can think of, the first--and usually only--impulse is to put the title in both your names as Joint Tenants.
Married couples aren't the only ones relying on Joint Tenancy. This ownership strategy is widely used by friends, life partners, parents and their children, among others. It's an ownership method so pervasive, many consumers often say they know of no others.
Why is Joint Tenancy so frequently employed? Ironically, otherwise well informed consumers choose Joint Tenancy because they've heard it is a cost-free replacement for a will and that it avoids probate. These consumers focus on the fact that at the death of one of the owners, Joint Tenancy--or more precisely, Joint Tenancy with Right of Survivorship-- immediately passes full ownership of an asset onto the surviving Joint Tenant by operation of law. So, yes, it does circumvent probate and avoid the need for a will. At least for the moment.
What all too many Americans unfortunately overlook is the fact that Joint Tenancy only temporarily avoids probate. It also brings with it a slew of problems that more than make up for any short-term convenience it provides. In fact, Joint Tenancy can end up costing you--and your loved ones--many times the expense and headaches you thought you were avoiding.
Click below to learn more about Joint Tenancy from the following sections:
- Probate, After All
- Losing Control
- The $675,000 Question
- Capital Gains Exposure
- Joint Tenancy and Gift Taxes
- Exposure to Risk
- Alternatives to Joint Tenancy
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