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Joint Ownership: When is it Appropriate??

Many people own real estate or bank accounts with another person, often a spouse, adult child, other relative, or trusted friend. Some individuals “add the name” of another person to their bank account for convenience, such as having bills paid and refunds received. Others use joint tenancy as a will substitute, since the deceased party’s interest in the property passes automatically to the surviving joint tenant.

Often such use of joint tenancy have unintended effects that can result in someone taking ownership when the initial owner only intended the joint owner to have “limited use of the property” during the initial owner’s life. This can result in litigation that was exactly the opposite of the intent of the party creating the joint tenancy! Because of its common usage, it is important to understand the legal effects of owning property in joint tenancy with the right of survivorship.

There are advvantages to owning property jointly with right of survivorship. Since title passes automatically, by operation of law and outside Probate, the cost of administration is reduced, and there is little or almost no delay in transfer of title. Also, any attempt to contest the transfer after death can be very difficult—notwithstanding the verbiage in the will or other appropriate documents. Another advantage is that joint tenancy is simple and inexpensive to create. A properly prepared deed, for example, will ensure that when real estate is held by more than one person, the survivor will automatically become the sole owner of the property.

There are also disadvantages. The creation of a joint tenancy may be considered a gift with unintended tax consequences. Consider that if real estate is sold, a joint tenant, who contributed nothing to the purchase, may be entitled to a share, or more, of the sale proceeds. All joint tenants (and in certain circumstances, their spouses) must execute the deed at the time of transfer. Uncertainty regarding ownership may also affect the marketability of a property –even after the death of one of the tenants.

Consider that jointly owned bank accounts may be completely depleted by any one of the tenants. Joint accounts created by a parent with children “for convenience” in paying bills etc. may have unintended and horrific consequences. If a child who is co-owner of a parent’s checking accountant is bequeathed an equal share of the parent’s estate, that child may receive a larger share of the parent’s total assets than the child’s siblings—the opposite of the parent’s intention.

Consider also, if parents give property to several children in joint tenancy, and one or more of the children dies, the widowed spouse and children of the deceased child may be deprived of any right or interest in the property. Children of a marriage that ends in death or divorce may be inadvertently dispossessed by, operation of law, by the subsequent joint ownership of their surviving parent with a third party.

Ownership of property should be carefully evaluated; joint ownership can be a useful tool in estate planning, however careful consideration must be given to its impact on your estate intentions. Failure to construct ownership properly can lead to unintended consequences and even worse—the courthouse!


Tarta Law Firm NJSteven W. Tarta, Esq. brings more than 45 years of professional experience to his practice, with a sophisticated focus on Estate Tax Planning, Living Trusts and Elder Law.

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