Problems with real property in joint tenancy
By Steven M. Greenwood Special to the Acorn

An area that should be of concern to all of us is property titled in joint tenancy (when created between a husband and wife) and how that titling may pose some significant problems in the future. Let's take a look at some of the issues this situation creates.

Within an estate planning context, though joint tenancy will avoid probate at the death of the first spouse, it will not avoid probate upon the death of the surviving spouse. That being the case, the following issues regarding the probate process- or the Government Plan, as I sometimes call it- should be considered:

+Cost. Excessive and unnecessary costs of administering one's estate upon the passing of the surviving spouse are now required. These costs are avoidable with timely and proper planning.

+Delay. The probate process can take as long as several years or more, during which time the family will have lost complete control over its assets.

+Publicity. Since the estate will pass to heirs through the probate process, all that they will receive is an open book, that is, part of the public record. One should not "hang their laundry" out in this manner.

+Total loss of control. Under the probate process, total control over all that one has spent a lifetime building has been given up, with assets ultimately being distributed in a manner that may conflict with the parties' objectives.

+Loss of asset protection. Joint tenancy does nothing to protect the estate from creditors of one's spouse or children.

Perhaps the most significant problem, however, is that by holding property in this manner, you are exposing your surviving spouse to the possibility of a totally unnecessary and easily avoidable capital gain/income tax upon the sale of the jointly titled property. In addition, if the spouse were to keep the property instead of selling it, the new basis may, in certain circumstances, be depreciated, creating new and advantageous income tax benefits.

So, one of the first things you might want to consider is seeing an attorney in order to discuss a more appropriate manner of owning your home or investment real estate.

Your willingness to address this issue may help you avoid the unnecessary cost, delays and publicity that will occur through the probate process. It will assure that you remain in control over the ultimate disposition of your life's work to the greatest extent possible. It will make sure that should your spouse remarry, there isn't an inadvertent disinheritance of their children. It will protect your assets against creditors of the spouse and children, and it will assure that your family avoids totally unnecessary capital gains/ income taxation.

It's the least you can do for those you love and care for.

Greenwood is an estate planning attorney in Westlake Village and can be reached at (805) 277-5020.