Some advisors recommend using joint tenancy rather than a Las Vegas Living Trust as a method to avoid probate. If property is held jointly and one of the owners dies, the property may pass to the surviving owners by “operation of law.” Jointly-held assets create unintended consequences and should be avoided.
Let’s suppose you are single and you have three children all of whom you intend to receive equally in your assets when you die. Adhereing to bad advise, you re-title your assets in your name and in your daughter’s name. Here are seven problems with joint property owned by your daughter.
- Co-owner liability. If your daughter has a bankruptcy, lawsuit or divorce, the property is subject to liquidation. This one point should be enough to dissuade you from jeopardizing your assets by putting her name on your assets.
- Loss of Control. The other joint owner has the power to sell the asset or to disturb your plans to sell.
- Gift tax. You have to file a gift tax return for any gifted amount over $14,000.
- New will. Moving your assets to your daughter is a change to your will. When you die, the daughter has full rights to the property even if your will states that other children should inherit with her.
- Wrong tenancy. Not all jointly held property is treated the same. For real estate, there is joint tenancy, tenants in common and tenants by the entirety. If the title is wrong, it will trigger a probate. Other assets jointly held do not guarantee the other owner will receive by operation of law. The interpretation will depend on the state.
- Delay of probate. Joint tenancy doesn’t avoid probate, it only delays it until the other co-owner dies.
- Incomplete. If you fail to property title the assets you may still end up with a probate.
Titling assets with a Las Vegas Living Trust Attorney is easy to do and avoids all these problems. The cost is reasonable and you can also protect from guardianship or conservatorship. The assets are protected from your children’s lawsuits, bankruptcy or divorce. There are no gift tax consequences and it is the generally accepted way to distribute assets in our modern society. You can protect your children from losing their inheritance by keeping it in a Living Trust once you die. Don’t follow bad advice from people trying to show you how to save a buck. Living Trusts are tried and true.