3 Hidden Risks of Joint Tenancy to Avoid Probate
Joint tenancy, also called joint tenants with rights of survivorship or JTWROS, is a means by which couples and business partners often try to avoid probate court when one of the two die. It offers equal rights to all assets without the need to go through legal battles to cement them in the event of a death.
However, it’s not a magical way to get a free ride, and there are a number of risks involved that many people don’t consider. Learn the hidden risks of joint tenancy, why this road may not be your best option to avoid probate, and how an estate planning attorney can help you.
Risks of Joint Tenancy to Avoid Probate
Joint tenancy can help to avoid probate. Usually when someone dies without a solid estate plan, the courts get involved to determine whether the will is valid, and to determine any assets and liabilities possessed by the deceased and how they will be allocated. This process can take weeks or even years if the estate is complex.
JTWROS can automatically bypass these issues and avoid probate by quickly transferring assets and liabilities to the surviving partner. This is a huge advantage. However, there are also risks of joint tenancy, including frozen bank accounts, unstable relationships, and the selling off of the assets.
If you have a volatile relationship with your partner, it could pose problems with joint tenancy unto itself. Joint tenancy requires complete agreement on any aspect of the asset or business in question. This means that while both partners are alive, you need to be able to work seamlessly together as a team. If you can’t, you may not want to consider this option.
Frozen Bank Accounts
If the deceased person is heavily in debt when they pass on, probate courts may step in regardless of joint tenancy. In fact, they might freeze your accounts to stop you from liquidating assets in an effort to avoid paying your debts. If there’s any question about the nature of liabilities, this is a possibility.
Control of Assets
If you have intentions for the future of your assets or business after you die, joint tenancy is not necessarily the way to go. When you establish joint ownership, upon your death your partner gains complete and unfettered control over the asset in question. Your desires at that point become null and void. Your partner can bequeath the asset to someone else. They can sell it off for any reason. They can do whatever they like with it.
For this reason, joint tenancy is not always the best idea if you’ve got plans for the future of your assets after you pass on.
Estate Planning Attorneys
There are many alternatives to JTWROS, including split ownership of assets, passing your assets to your heirs when you die, or allowing the other partner to access their portion of the assets when they pass on, while protecting your part.
The right estate planning attorney can guide you through the best decisions for you. If you’re in Montana and need help, call Tanko Law for help avoiding probate without the risks of joint tenancy today.