Most people seek to avoid probate because it can be expensive, inaccurate and timely. Probate can slow down the transfer of estate property for many months. One way around probate is through the legal fiction of joint tenancy. Here are some common questions and answers about joint tenancy.
Should I put my property in joint tenancy with my children?
"My husband recently died, and I am now the sole owner of the family home, which is worth a good deal. When I die, I want the home to go to my three children - and I don't want to have to pay probate fees. A friend suggested that I should simply transfer the home to myself and three children as joint tenants with survivorship rights. Is this a good idea?"
While the creation of a joint tenancy will work to keep the property out of your probate estate, you might prefer a living trust, for several reasons.
First, the living trust will provide you with much greater control and flexibility. If you create a joint tenancy, you are giving your children a current irrevocable interest in the home. If you later change your mind and want to leave all or part of your home to others or if you want to exclude one of your children from taking, you will not be able to do so.
Second, if you decide to sell your home, all of your children will have to consent, and on its sale they would be legally entitled to share in the sale proceeds.
Furthermore, by creating this joint tenancy you might owe a federal gift tax, because your creation of the joint tenancy will be considered a taxable gift.
Lastly, creating this joint tenancy might trigger a reassessment of the value of your home. You don't want to wind up paying more in property taxes simply because you created a joint tenancy with you children.
In addition to joint tenancy, other ways for avoiding probate during estate planning includes establishing a savings account trust, opening a payable-on-death bank account and adding a transfer-on-death designation to any securities you own. Assets in these accounts will pass automatically to the person you designate as beneficiary without the need for probate. Life insurance policies also may play a role in avoiding probate.
For 2009 Probate Code Information in your state, including estate planning, wills, trusts, probate and end-of-life services visit GotTrouble.com