As a Michigan estate planning attorney, I regularly see families that own much (if not all) of their property jointly. Joint tenancy involves both (or multiple) people having full ownership of the asset. I see it most commonly with homes, bank accounts and non-retirement investment accounts.
Now don’t get me wrong, there are situations where owning something jointly is just fine. However, I regularly see it as a replacement for proper estate planning (for example, putting children on your accounts as joint owners). That is a very bad thing. Why? We’ll cover that in a second, but first lets think about why people own property jointly.
Many people consider it easy. Well, I can’t argue with that. It is easy. You just put the names of all the owners on the document(s) proving ownership. Some consider it a gesture of love. After all, the idea of jointly owning something seems to have a “love” or “trust” connotation. “I love you enough that I’m giving us both full right to this.” Very common in a marriage (traditional or otherwise). Finally, some people know that jointly owned property bypasses the probate court process when the first joint owner dies. That’s true.
Yet each of those “pluses” comes with a whole host of “minuses.” Here’s a look at some examples:
- No control – you have given up some control while alive and a lot of control if you become incapacitated or pass away. Ultimately, what you have may pass to people you would have never wanted to receive it.
- Probate. Yes, jointly owned property bypasses the probate process, but that only delays it . . . it does not avoid it.
- For unmarried individuals, there could be unintentional estate or gift taxes.
- Loss of planning opportunities now and down the road.
- It is available to the other person’s creditors and you lose asset protection possibilities when you pass away.
As with all planning, each family situation is unique. If you jointly own property with someone else, don’t you think you owe it to yourself and your family to find out what would happen and how you can make sure your wishes are followed? Call us at 616-827-7596 to schedule a Peace of Mind Planning Session and have your questions answered.
Michael Lichterman is an estate planning and business planning attorney who helps families and business owners create a lasting legacy by planning for their Whole Family Wealth™. This goes beyond merely planning for finances – it’s about who your are and what’s important to you. He focuses on estate and asset protection planning for the “experienced” generation, the “sandwich generation” (caring for parents and children), doctors/physicians, nurses, lawyers, dentists, professionals with minor children, family owned businesses and pet planning. He takes the “counselor” part of attorney and counselor at law very seriously, and enjoys creating life long relationships with his clients – many of which have become great friends.