Joint Ownership: Pros and Cons For Bypassing Probate

When it comes to your estate plan, have you considered joint ownership?

What is joint ownership, and why does it matter? If this is the year you finally create an estate plan for your family, that’s a great decision. You may also consider adding children or loved ones as joint owners on certain assets to avoid probate. Before moving forward, keep an open mind and read this article first. Then, consult an experienced, reputable estate planning attorney to ensure your plan works best for your family from every angle. While avoiding probate is a top priority for many, joint ownership has both pros and cons—plus, other strategies can achieve the same goal.

Do The Pros Outweigh The Cons?

Joint ownership, especially as a joint tenancy with right of survivorship, can help bypass probate. The surviving owner automatically inherits the property, saving time and money. However, before adding an adult child as a joint owner, consider these potential drawbacks:

• Avoidable transfer tax exposure. If you add your child to the title of property you already own, it may be considered a taxable gift of half the property’s value. And when you die, half of the property’s value may be included in your taxable estate depending on how it was jointly held at time of death.
• Increased income tax. As a joint owner, your child loses the benefit of the stepped-up basis enjoyed by assets transferred at death, exposing them to higher capital gains tax.
• Exposure to creditors. The moment your child becomes a joint owner, the property is exposed to claims of the child’s creditors.
• Loss of control. Adding your child as an owner of certain assets, such as bank or brokerage accounts, enables him or her to dispose of them without your consent or knowledge. And joint ownership of real property prevents you from selling it or borrowing against it without your co-owner’s written authorization.
• Unintended consequences. If your child predeceases you, the assets will revert to your name alone, requiring you to come up with another plan for its disposition.
• Unnecessary risk. When you die, your child receives the property immediately, regardless of whether he or she has the financial maturity and ability to manage it.

Explore Other Ways To Provide For Your Loved Ones And Avoid Probate

While joint ownership may seem like the easiest way to avoid probate, consult an experienced attorney to explore all options. Your unique circumstances determine the best approach to protect your assets and ensure your loved ones gain access efficiently. Properly designed trusts can achieve your estate planning goals without the risks of joint ownership. Take action today—call our office at (470) 235-7868 to create a plan that meets all your objectives.

Looking to find an experienced estate lawyer in the Georgia area who is skilled in asset protection and estate plan preparation? Shannon Pawley is an attorney in Georgia with expertise in estate planning and asset protection. Shannon can provide assistance with creating an estate plan to include making a will and how to establish a trust properly. If you have questions about asset protection or questions about making an estate plan, reach out to Shannon and she will be glad to help answer all the estate planning questions you might have!