Thursday, January 27, 2011

"Joint Tenancy" v. "Living Trust": Can "joint tenancy" be "too good to be true"?

Is “joint tenancy” an effective strategy to prevent future probate, without the expense of setting up a living (to become irrevocable) trust?

The elderly person may find this convenient, but there are disadvantages, such as loss of control if the dynamics in the family go wrong. The “Dummies” series has a good writeup” (June 2010) (“How to bypass probate with joint tenancy here.

The “legal series” publisher Nolo has a more detailed article “Avoid probate with joint ownership: learn how jointly owning property is one easy way to avoid probate” link here.  There are various wrinkles in some states, such as Texas and California. There is “Joint tenancy with right of survivorship”, “Tenancy by the Entirety”, and “Community property with right of survivorship”. 

You can’t use joint tenancy to avoid debt.

Here’s another writeup at “Investopedia”, link.

“Got Trouble” has a writeup giving the disadvantages of joint tenancy compared to trusts, link. With a trust, the proposed beneficiaries may at least sometimes be held to higher standards of behavior.

Nolo, in answering “question 28114”, maintains that a living trust may help the bequeathor to show that she understands what she is doing, should other parties challenge the outcome after death.  Claims of undue influence or bad faith might occur with either joint tenancy or a living trust.

Another advantage of the trust may be legal protection of the assets of the trust from lawsuits about unrelated matters brought by the trustees.  This doesn't always get mentioned. 

Abbreviations may be JROS, ROS, or JTWROS, or JNT.

Joint tenancy used to be a popular concept with same-sex couples. 

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