When it comes to estate planning, joint ownership is one of the most used tools. By holding a capital asset jointly with another person, property can automatically transfer to the surviving joint owner after the first owner’s death. Joint ownership can be used to reduce estate complications and even avoid probate fees altogether. In this post, we’ll dive into how joint ownership works and what you need to consider when it comes to estate planning.
All joint owners share equal ownership of the jointly held property while the joint owners are alive. The most significant advantage of having joint ownership of an asset is that it can simplify asset transfer after one of the owners passes away. In most cases, when a joint owner dies, the surviving joint owner will automatically receive the deceased owner’s interest.
Another advantage of joint ownership is that assets held in this way typically don’t go through probate after the death of the first owner. This means that the joint property is not included in the value of the deceased person’s estate, and it’s not distributed according to their Will. This, in turn, helps reduce or eliminate probate fees.
However, it’s essential to understand that joint ownership may not be appropriate for everyone. You should think about what will happen if both joint owners pass away or if the relationship between the joint owners sours in the future. It is worth noting that when you transfer your ownership share to someone else through joint ownership, you lose control over the asset, so there may be some risk involved.
It’s also important to ensure that your joint ownership agreement is correctly set up. If it’s not appropriately documented, the joint property may be subject to claims that it forms part of the deceased joint owner’s estate. If this happens, you risk probate fees or may end up with unintended beneficiaries receiving the asset.
The consequences of joint ownership should be well understood before you enter into any agreement and should be reviewed as part of any estate planning process. This is also a good time to think about the appropriate wording that will be included in your Will, just in case one joint owner didn’t survive the other.
If you’re considering joint ownership as an estate planning tool, it’s crucial to remember that every situation is unique, and what works for one individual may not be suitable for another. Joint ownership can help you avoid probate fees, but there are potential risks involved. You should make sure to review your options and consider consulting an experienced estate planning attorney who can help you understand the necessary documents required and what options are best for achieving your desired outcome. With the right planning and preparation, joint ownership can be used effectively as part of your broader estate planning strategy.
PATRICK A. BELL – Lawyer at Bell, Jacoe & Company in Summerland BC provides legal help with real estate and wills and estate law.