When considering estate planning in California, many homeowners assume that using a joint tenancy with right of survivorship automatically protects their property and simplifies inheritance. While joint tenancy can bypass probate and allow property to pass directly to a surviving co-owner, it carries hidden complications — especially concerning step-up issues, creditor risks, unintended disinheritance, and incapacity gaps. For many families, these risks make a trust-based plan a safer and more flexible alternative.
Common problems we see
Adult child on title
It’s not uncommon for parents to add an adult child to their home’s title as a joint tenant, thinking it will simplify inheritance. But once a child is on title, they effectively become an equal owner. That means the property is exposed not only to their personal creditors, but also to potential legal claims, even if those issues arise decades after the deed change.
Divorce judgments
If a joint tenant goes through a divorce, any court judgment or lien related to the divorce could attach to the property, potentially jeopardizing the co-owner’s share. This is a real creditor risk many don’t anticipate.
Co-owner debt liens
Because joint tenancy treats all co-owners as equal owners, debt or lawsuits against one tenant can lead to liens or claims against the entire property. Even if the other co-owner is not individually responsible for the debt, their share may be at risk.
Unequal contributions & sale disputes
Joint tenancy inherently assumes equal ownership, even if one owner contributed more to the down payment, mortgage, renovations, or upkeep. If the property is sold or there’s a dispute later on, there is no built-in mechanism to reward unequal contributions or fairly divide proceeds.
These dynamics can cause disagreement among co-owners or heirs — especially in blended families or partnerships where contributions and expectations have been unequal.
The Trust alternative
For many families and individuals, placing property in a correctly drafted trust is a much cleaner, safer alternative. Here’s why:
- Clear distribution rules | A trust can precisely define who receives the property (or its value) when a grantor dies, avoiding unintended disinheritance or sibling rivalry.
- Successor trustee control | A successor trustee can take over if you become incapacitated, helping avoid “incapacity gaps” that can plague joint tenancy arrangements.
- Tax coordination and step-up potential | Trust-based planning (especially when paired with proper titling like community or survivorship property) lets you structure for favorable tax treatment. This can mitigate the “step-up issues” common under joint tenancy.
- Refinance readiness | Because the trust holds the property, future sales or refinances are typically easier. Owners are not dependent on co-owner agreement as under joint tenancy.
- Privacy | A trust keeps your estate plan private, avoiding public probate records.
- Flexibility | Trusts allow for unequal distributions, charitable bequests, or special provisions beyond the “survive and inherit” simplicity of joint tenancy.
If you want to safeguard your property, shield it from creditor risk, preserve fair handling among heirs, and avoid pitfalls like step-up losses, a trust is often the better path.
More risk than protection
Joint tenancy may appear simple, but it often creates more risk than protection, exposing your home to creditor claims, unintended tax consequences, and disputes among heirs. A well-crafted trust, on the other hand, offers clarity, flexibility, and long-term security for you and your family.
Need tailored guidance for your situation or want to explore whether a trust is the right solution? Request more information here: https://californialivingtrusts.com/request-info/