Don’t use Joint Tenancy to avoid Probate

Don’t use joint tenancy to avoid probate

Having a trust avoids probate at death. Probate is expensive. It keeps your family from receiving your assets for a substantial time, often for more than a year, after you die.

But here is a seemingly simple way to avoid probate. Suppose a single mom owns a house and has an adult son. She says, “I will deed my house to my son as a joint owner (joint tenancy). Then when I die it will pass immediately to him.” This method is cheap and quick. But bad things can happen before the mother dies. Because the son now owns one-half of the house while the mother is alive, the mother will always need her son’s consent to do anything affecting the house. She can’t borrow money on it. She can’t obtain a reverse mortgage.  She can’t sell the property without his consent unless she does it through a court-ordered sale (called a partition suit; it is expensive; and she would only own one-half of the proceeds). If the son needed money, he could force a sale of the house through court even over his mother’s objection. And he would receive one-half of the proceeds. If married, the son’s spouse could pressure him to not co-operate with his mother. Suppose mother and son had a falling out. She could not take his name off of the deed in trying to disinherit him.  And what if the son was at fault in an auto accident and caused serious injury? Or he had bills he could not pay and got sued? In both cases a creditor could force the sale of the house in order to collect from the son’s half. And what if the son gets a divorce? Would the court consider his one-half ownership of the house in awarding assets to his wife?

Putting the house in joint names with the son is not worth the risk. And because the mother does not have a trust, she probably does not have important durable powers of attorney for health care and asset management. No trusted person could make health care decisions for her if she were unable to make her own. No one could handle her finances if she were incapacitated. In fact she might have to be put under a court supervised conservatorship if she could not care for herself. Having a trust solves all of those problems. Deeding the house to the son creates problems.



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