Using Joint Tenancy to Avoid Probate
Florida residents are increasingly looking for legal loopholes to help their families avoid the time and cost of probate after they have died. Though there are many options, ranging from living trusts to transfer-on-death deeds, one of the easiest and most popular probate-avoiding devices is joint tenancy.
Joint tenancy is a type of co-ownership that functions to allow ownership rights to pass automatically to the joint owner when one owner dies. The property does not pass through a will and so there is no need to go through probate. This type of ownership is unquestionably one of the easiest ways for married couples to share property and leave assets to one another when one spouse passes away.
Joint tenancy is not limited only to married couples. Any two people can own something in joint tenancy, including real estate, vehicles, bank accounts and other valuable property.
A person should think hard, however, before creating a joint tenancy simply to avoid probate, as there are certain drawbacks.
For instance, the very nature of joint tenancy means that you give up half your ownership in something. While this is a great option for married couples, longtime partners and siblings, for some people it means that they have lost control of half of this asset in the event of a breakup or rift. Therefore, if they want to leave the property to someone else, they can only transfer half of the ownership rights.
Further, in most cases, the gift tax will apply to assets transferred to joint tenancy. The tax liabilities of this type of gift can be burdensome to the person receiving the gift. The only exception to the gift tax is if you are transferring property of less than $14,000 to a spouse.
Joint tenancy is an easy and reliable method for avoiding probate, but should be undertaken with great consideration. If you have questions about establishing a joint tenancy, contact a Florida estate planning attorney from The Charles Law Offices.