 | John Gibson
is a senior partner in the Wichita law firm of Gilliand & Hayes. He has been practicing law for nearly 30 years. In addition to healthcare law his practice includes wills, trusts, estate planning, probate and general representation of individuals and small business. Contact information: Phone:
316-264-7321; Fax: 316-264-8614; and e-mail: jgibson@boyerds.com |
Legal
2003-03-01 11:49:00
What about joint tenancy?
ANSWER: Generally, it is not advisable to use joint tenancy as an estate planning tool, to pass real estate to children. We should understand how joint tenancy works. Real estate ownership in joint tenancy is created by a deed to two or more persons with language clearly expressing an intent to create a joint tenancy. The principle feature of joint tenancy is survivorship. The advantage to joint tenancy is that upon the death of a joint tenant his or her entire interest in the property automatically and instantly passes to the survivor or survivors of the joint tenancy, and eventually to the last survivor. A joint tenant may freely dispose of his or her interest but only of his or her interest - not the entire ownership. Also, such disposition will "break" the joint tenancy and cause the transferee a tenant-in-common with the other joint tenants. The primary advantage of joint tenancy ownership is avoiding the requirement of probate to pass title at death. There are disadvantages. The primary disadvantage of joint tenancy is that it effectively restricts ownership of real estate to those situations where the owners desire their interests to pass at death to their joint tenants. Once property is put into joint tenancy it is effectively owned by the joint tenants as well as the transferor. It may become subject to debts and obligations of the joint tenants. Also, if you want to sell the property and it is in joint tenancy you must get the permission and signature of the joint tenants. It is not unheard of for a child to refuse to sign a joint tenancy deed to allow a parent to sell the property. A better alternative in many situations for transferring an interest in real estate at death and avoiding probate is titling the real estate in "transfer-on-death". In 1997 the Kansas Legislature passed a "will substitute" bill. It allowed, for the first time, a "transfer-on-death" ownership for real estate. A transfer-on-death deed will transfer ownership of the interest upon the death of the owner, automatically and instantly, to the transferees named in the deed. This avoids having to go through a probate proceeding to transfer the real estate. The beauty of the transfer-on-death deed is that the property remains solely owned by the transferor, being the parent in your situation. The children are not owners of the property, have no say so if the parent later wants to sell the property, and the property is not subject to creditors of the children. Thus, the transfer-on-death deed accomplishes the same thing as a joint tenancy deed, being the automatic and instant passage of property upon the death of the transferor. But, the transfer-on-death deed keeps the property solely in the name of the transferor, without the encumbrances of other persons that go along with joint tenancy.For the above reasons, in most parent/child situations, a transfer-on-death deed for real estate is preferable to joint tenancy. For the same reasons, a "payable-on-death" bank account, which works the same as a transfer-on-death deed, is a preferable way to hold ownership in a bank account as opposed to joint tenancy.
