Many people wishing to leave their family home to their children after their death make their children joint tenants to the home. These people wish to avoid the time and expense of probate. As joint tenants, the children are considered part-owners of the home and upon the death of the parents, share equally in the home.
However, this estate planning strategy has many risks. As a joint owner, the children would have equal rights to the home as the parents even before they die. If the parents wish to sell the home, refinance it, or make any other financial transaction involving the home, they would have to get the permission of the children first.
Even if the parents trust their children not to interfere with their use of the home during their lifetime, the home could fall into the wrong hands. If any of the children are married and subsequently divorce, then their share of home may be included in the child’s marital estate. Further, if the child has a judgment entered against them, whether as a result of a personal injury lawsuit or bad debts, then those creditors could place a lien against that child’s interest in the home. Finally, if one of the children fails to pay their taxes, then the IRS could enter a tax lien on the home.
Parents who wish to avoid the hassles of probate when leaving their children property should contact an attorney experienced in estate planning. Other strategies, such as a transfer on death deed, allow parents to transfer the family home to their children without the home outside of probate without the risks of joint tenancy. It might be advisable for parents to work with an attorney to develop a comprehensive estate planning strategy to minimize the time and expense involved in distributing the estate through probate.
Source:nwi.com, “Estate Planning: Risks of Joint Tenancy,” Christopher Yugo, February 10, 2019