"Joint tenancy" and "survivorship" are terms that refer to a particular way that real estate and other assets can be titled. Joint tenancy means that the real estate is titled to two or more people jointly. Each of the owners has an equal share of the real estate and is entitled to occupy the entire premises. Spouses who put their home or other real estate in the names of both spouses usually have joint tenancy with survivorship rights of the house and real estate. However, unless the title specifically says "with survivorship rights," one half of the property will have to be probated at the first death. Worse yet, it may not even go to the surviving joint owner.
If the joint tenants of a piece of property have "rights of survivorship" that means that if one of the owners dies, the surviving owner or owners inherit the deceased owner's share of the real estate. Joint tenancy with survivorship rights is one way to avoid probate for real estate because the jointly owned property passes directly to the surviving owners.
However, most reputable Ohio probate attorneys advise against using joint tenancy as a means of protecting their home and other real estate against the probate process. This is because joint tenancy can have more disadvantages than advantages and only postpones probate rather than avoiding it all together.
According to most Ohio probate attorneys, joint tenancy with survivorship rights has these major disadvantages:
While the real estate avoids probate upon death of the first owner or spouse, the property is still subject to probate upon death of the second spouse or owner unless another person is named as joint owner or other precautions are taken.
Joint tenancy does not protect the real estate against law suits or creditors if one of the owners gets in an accident or other legal trouble.
If a co-owner becomes incapacitated, the other owner will have to involve a court in order to sell or transfer the real estate in any way.
If the surviving spouse/owner adds a son, daughter or other family member as joint owner to further avoid probate, the real estate ends up fully in control of the added owner if the original owner dies first. Additionally, the real estate becomes subject to any lawsuits or creditor problems the added owner is involved in. Removing a joint owner from the title is much more difficult than adding one and usually involves court action.
Joint tenancy with survivorship rights can result in adverse tax consequences, including losing the step-up in basis, that can be avoided through other means.
Generally, Ohio probate attorneys agree that to truly avoid probate, real estate needs to be put in a trust so that the rules of the trust, rather than probate rules, governs the real estate and its passing to heirs.
Unlike joint tenancy with survivorship rights, real estate titled to a trust never has to go through probate. The real estate is actually owned by the trust, rather than a person, and therefore never has to transfer ownership because the trust can't "die." The trust dictates who gains control of the trust and property if the grantor and/or trustee dies. All of this occurs without the involvement of a court, keeping your financial matters private and ensuring that your estate passes to heirs in the way that you want it to. Further, the property passes free from the claims of any creditors of the decedent.
If you would like to find a better way to avoid probate for real estate than joint tenancy with survivorship rights, call the Ohio probate attorneys at Gudorf Law Group, LLC. to schedule a free consultation: 1-877-483-6730.