The probate process can be lengthy and complicated, particularly if you own complex assets. Narrowing down the amount of your personal assets that will pass through probate may be a concern of yours. Some people decide to create a joint tenancy arrangement as a way to bypass probate.
Joint tenancy can apply to your home as well as an automobile or other forms of property, provided the law allows for it. It is important to know how joint tenancy benefits people as well as any disadvantages to sharing ownership in this manner.
How joint tenancy works
You create a joint tenancy arrangement when you and one or more persons buy property together. According to Bankrate, all parties have equal rights and interests in the property through a mutual contract. In the event you or a co-owner die, the remaining ownership interest transfers to the surviving owner or owners without first going through a probate court.
Certain situations usually motivate people to jointly own property. Married couples typically want joint tenancy for a marital home. If one spouse dies, the other spouse gains the remaining ownership and keeps the residence. In general, people who want to sustain a long-term living arrangement or a business location set up joint tenancy.
Drawbacks to joint tenancy
Like any form of ownership, joint tenancy has possible disadvantages. You should have harmony with your co-owner or making decisions together regarding the property may be difficult. Also, if your co-owner gets into serious debt, creditors might claim the co-ownership interest. As a result, you could end up sharing property with an undesirable partner.
In addition, if you decide you want to leave a co-owned home to a child or another heir, you may have a difficult time convincing your co-owner to give up control of the property. Consider a joint tenancy option in light of your personal circumstances.