Joint ownership for a husband and wife is usually recommended as it will immediately transfer the property to the surviving spouse. Where issues usually arise is when there is joint ownership between a parent and child or another person. Yes, it may avoid probate (at least in part), but you have actually given up control and have possibly opened up the property to someone else’s liability or legal action.
What if you put your child’s name on your deed and they get a divorce? Or what if they are in an accident and it ends up being their fault? What if they need to claim bankruptcy? That account is partially theirs and may be an asset in danger. Consider a second opinion if your current attorney or advisor recommended that you put your kids (or anyone else’s) name on your account. There are better options!
There is something called unintentional disinheriting. This can happen if you’ve been married before, and your second spouse’s name is now on the deed. You may have wanted the family home to go to the kids, but the spouse now has 100% rights to it and your children may never see it. This also includes other assets such as bank accounts, accounts with beneficiaries like 401(k)s, IRAs, brokerage accounts, stocks, and more. Many scenarios like this can happen.
The chance of a potential lawsuit is on the rise. With just your name on the deed or title, you are the only one that could be liable in a lawsuit. When someone else’s name is on the deed or title, there is a greater chance of having the asset exposed to loss. If your joint owner becomes mentally or physically incapacitated or passes away and can no longer sign their name, especially if real estate is involved, you’ll have to get approval from the probate court (called Living Probate) and pay court and attorney fees before you can sell or refinance the jointly-owned property.
These are only a few reasons joint ownership may not be the right choice for your estate plan. Is joint ownership worth the risk?
Are you willing to risk the liability to the loss of control or, worse yet, loss of the asset with joint ownership when there are other options that will work to protect the asset from probate or creditors without the risks of joint ownership?
If you’re involved in a jointly-owned business or want to speak with us about joint ownership, call us at 724-837-3553 to set up a time to talk about your options.