As Estate attorneys, we have been asked this question many times. You may have heard of joint tenancy with respect to property ownership, but joint tenancy can be used in other ways.
What exactly is joint tenancy?
It is defined as the holding of an estate or property jointly by two or more parties, the share of each passing to the other or others on death. This holds true regardless of what the deceased might have written in a will or trust because joint tenancy supersedes those documents.
There are other ways to use joint tenancy to pass assets to someone at the time of your death without probate, but there are also certain ramifications.
Consider these scenarios:
1. You set up a joint tenancy bank account with your spouse, child or friend. If you die, they will have immediate access to the account and funds. But it also means that they will have access to those funds at any time while you are alive and could withdraw funds from the account without your approval.
2. If they file for bankruptcy, their creditors, or the bankruptcy trustee, could take some or all of those assets since they are technically the other joint tenant’s assets as well.
3. With that same bank account, if the joint tenant who is not your spouse marries and then gets a divorce, his or her spouse could claim an interest in those funds.
In the last two scenarios, while you may be able to prove that the funds were intended to be yours, at what cost?
A preferable option to avoid probate court is to create a living trust. With this option, assets are put in the name of the trust, created during your lifetime, and over which you have complete control. Trust assets are secure; they cannot be used without your permission or seized by a third party as in the scenarios above. At the time of your death, the assets are passed to your beneficiaries, bypassing probate court.
When considering your estate planning options, let the attorneys at The Greenberg Law Firm review your circumstances and recommend options that fit your needs. Contact us today for a free consultation at 630-416-4747.