When it comes to estate planning, avoiding probate is a key goal for many Californians. Probate can be a lengthy, public, and expensive process that delays the transfer of assets to your loved ones. While creating a trust is one of the most common ways to avoid probate, there's another, simpler tool that is often overlooked—joint tenancy.

What is Joint Tenancy?

Joint tenancy is a form of property ownership where two or more people own equal shares of an asset. It's commonly used with real estate but can also apply to other assets like bank accounts or vehicles. The unique feature of joint tenancy is the "right of survivorship." This means that when one of the owners dies, their share of the property automatically passes to the surviving owners without going through probate.

How Does Joint Tenancy Work?

For example, let's say you and your spouse own your home as joint tenants. When one of you passes away, the home immediately transfers to the surviving spouse. There's no need for probate or court intervention, making it a swift and cost-effective transfer of ownership.

The Pros of Joint Tenancy

1. Avoids Probate: The biggest benefit of joint tenancy is the ability to avoid probate entirely for the asset in question. This can save your heirs time, money, and stress.

2. Simplicity: Setting up joint tenancy is often as simple as adding another person to the title of your property. No complex legal documents are required, unlike trusts or wills.

3. Immediate Transfer: The right of survivorship ensures the surviving joint tenant has immediate access to the property, avoiding delays in ownership transfer.

The Cons of Joint Tenancy

While joint tenancy has its advantages, it may not always be the right solution for everyone. Some potential downsides include:

1. Loss of Control: Once someone becomes a joint tenant, you cannot sell or refinance the property without their consent. This can be risky if relationships sour.

2. Creditor Risk: If your co-owner has debts or creditors, the property may be subject to their claims. For example, if your co-owner files for bankruptcy, the property could be at risk.

3. Not Always Tax-Efficient: Joint tenancy can sometimes result in unfavorable tax consequences, particularly regarding estate and capital gains taxes.

Is Joint Tenancy Right for You?

Joint tenancy is best suited for individuals who want a straightforward way to avoid probate for specific assets and are comfortable sharing control with another person. It's a great option for married couples or close family members but may not be ideal for more complex estates.

For those with multiple properties, large assets, or a desire to have more flexibility and control, a living trust might be a better option. Consulting with an estate planning attorney can help you determine whether joint tenancy or another approach is the best fit for your situation.

If avoiding probate is your goal, joint tenancy is an easy, effective tool that can help streamline the process for your loved ones. However, it's essential to understand the potential risks and consult with an expert before making any decisions.

Reach out to a California estate planning attorney today to learn how joint tenancy can fit into your overall plan and ensure a smooth transition of your assets.

LEGAL DISCLAIMER

This article is intended for general information purposes only.  Any legal analysis or other content should not be construed as legal or professional advice or substitute for such advice.  No attorney-client or confidential relationship is formed by transmission of information.  If you require legal or professional advice, please contact an attorney or other suitable professional advisor.  The choice of an attorney or other professional is an important decision and should not be based solely upon advertisements and blog