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  • Home
  • About Us
    • Gratia Schoemakers
      • Community Outreach Program
    • Testimonials
  • Virtual Services
  • Estate Planning
    • Estate Planning Basics
    • Last Will and Testament
    • Revocable Living Trusts
    • Durable Power of Attorney
    • Medical Power of Attorney
    • Living Will
    • Family Estate Planning
    • LGBTQ Estate Planning & Asset Protection
    • Kids Safety Plan™
    • Business Succession Planning
    • Guardianship
      • Guardianship Planning
    • Special Needs Planning
    • Legacy Preservation Planning
    • Asset Protection
    • Trusts
    • Pet Trusts
    • Gun Trusts
  • Probate
    • Texas Probate Guide
    • Probate of a Will
    • Texas Affidavit of Heirship
    • Texas Small Estate Affidavit
    • Texas Heirship Determination
    • Texas Muniment of Title
    • Trust Administration
  • Family Law
    • Divorce
    • Collaborative Divorce
    • Mediation
    • Custody / Visitation
  • Blog
  • FAQs
    • FAQs – Videos
    • FAQs – Estate Planning
    • FAQs – Beyond Money in Estate Planning
    • FAQs – Divorce and Estate Planning FAQs and Myths
    • FAQs – Estate Planning for Newlyweds Myths and FAQs
    • FAQs – Estate Planning for Young Adults
    • FAQs – The Estate Planning Cast of Characters
    • FAQs – Expecting an Inheritance
    • FAQs – Myths and FAQs – Planning for Conflict Prone Families
    • FAQs – New and Expanding Families
    • FAQs – Pet Trusts
    • FAQs – Probate
    • FAQs – Standalone Retirement Trust Myths and FAQs
    • FAQs – Trust Modifications
    • FAQs – Unwinding Obsolete Planning
    • FAQs – Why You Want to Avoid Probate
    • FAQs – Year-End Planning Myths and FAQs
  • Contact
    • Virtual Estate Planning Login
    • Client Portal

How That “Simple” Fix Can Really Cost You and Your Family

February 15, 2018 By Gratia P. Schoemakers, Esq.

Joint Tenancy Pitfalls: The ‘Simple’ Fix that Can Leave Your Family Broke

There are many ways to own your assets.  When you die, it is only natural that you want your family to share in the bounty of your hard work.  As a way to simplify the transfer process and avoid probate, you may be tempted to add a child or other relative to the deed or bank account utilizing the ownership type of joint tenancy with right of survivorship (JTwROS).  However, while this type of ownership delivers a lot of potential benefits, it may also be masking some dangerous pitfalls.

Under JTwROS, when one owner dies, the other owner(s) inherit the deceased owner’s share of the property proportionately.  Its benefits are specific: ownership is transferred automatically without entering probate.  Because the property is transferred outside of probate, it is possible to keep this inheritance out of the clutches of creditors of your estate.  On the surface, this seems like a smart way to streamline the inheritance process, sidestep creditor baggage, and bureaucratic charges.  But the risks may outweigh the benefits.

You May Pay the Price

One of the main problems with JTwROS is that when you enter into this kind of agreement, you open yourself up to additional liability.  When you agree to a JTwROS, you put your assets on the hook for the other owners’ creditors, ex-spouses and flights of fancy.

Another problem with JTwROS, as it relates to real estate, is that there are now multiple owners of the property.  You must now get the approval of the other owners if you would like to mortgage, refinance, transfer, or sell the property.  It does not matter if you are the only one who is occupying the property or paying the expenses, by adding additional people as owners, you are giving away control.

With respect to any bank accounts, once you add an additional owner, that individual, as an owner, has the right to go to the bank and withdraw whatever money is in the account.  The bank is merely going to make sure that the individual is listed on the account and will freely turn over your money to him or her.  If a joint owner’s creditor serves the bank with a garnishment order, they can also seize the money in the account, even if the joint owner was only added to help avoid probate.

Disinheriting Loved Ones

While JTwROS can have some impacts on you, it can also disrupt your estate plans because instead of property getting handed down, it’s handed over.  For example, if someone with children remarries and a new spouse is added to the deed as a joint tenant, that new spouse will inherit the property, not the kids or grandkids.  Because there’s a new spouse involved, the new spouse’s family will then be the ones to inherit upon his or her death, leaving the whole ‘branch’ of the original family may be disinherited—and not always intentionally!

Questions?  Give Us a Call

Although there are some advantages to a JTwROS, don’t let simplicity or speed be your only measures.  Call or contact us so we can discussing all of your options and tailor a solution that will best fit your needs.

Filed Under: Estate Planning Tagged With: Estate Plan, Home Owners, Joint Property, Joint Tenancy, JTwROS, Mistakes

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