Joint tenancy is a legal term that means co-ownership. When a married couple purchases property, unless you specify otherwise, it generally means each of you is considered a joint tenant and has co-ownership. When one of you dies, the other joint tenant immediately owns it all, regardless of what either of you put in your will.
While joint tenancy can be a useful way to transfer property, as jointly owned property passes outside of probate to the survivor when one owner dies, it does have some disadvantages, particularly in terms of blended families. For instance: Consider a husband and wife that own a home in joint tenancy, both spouses have children from previous marriages. If the wife passes, the husband now owns the home, when the husband passes, if he leaves his estate to his children or dies without a will, the wife’s children will have no claim to the home, nor any other jointly owned property.
Joint tenancies also deprive you of the flexibility of a will or trust, which allows you to use gifts and minimize taxes by paying out money over time to beneficiaries, instead giving it to them all at once. A trust may also allow you to plan for inheritances and gifts involving blended families.
In addition to the lack of flexibility of joint ownership in terms of estate planning, you also give up some control when it comes to jointly owned property. By giving someone co-ownership by joint tenancy, you give them co-control, meaning you cannot sell or mortgage the property without the co-owners agreement.
An estate planning lawyer can advise you regarding the right type of property ownership for your situation, and coordinate it with your other estate planning tools. It’s important to have all aspects of property ownership, retirement plans, incapacity plans and estate plans all work together to help you meet your estate planning goals.