ESTATE PLANNING: Joint tenants with rights of survivorship

2012-05-13T00:00:00Z ESTATE PLANNING: Joint tenants with rights of survivorshipBy Christopher Yugo Times Business Columnist nwitimes.com
May 13, 2012 12:00 am  • 

Q: Can more than two people own property jointly? What happens if one of them dies? Are there any risks to the others?

A: When you say jointly, I'm assuming that you mean as joint tenants with rights of survivorship as opposed to tenants in common.

The basic difference between joint tenancy and tenants in common, as it applies to estate planning, is what happens to an interest following a death. When a joint tenant dies, his or her interest is transferred to the surviving joint tenants as a matter of law. In other words, if there are two joint tenants and one dies, the surviving joint tenant owns the whole interest in the land.

On the other hand, when a tenant in common dies, his or her interest transfers according to the estate plan or the intestate statutes if there is no will. The surviving tenant in common does not automatically receive the deceased's interest. The survivor may find himself owning the land with the decedent's surviving spouse or children.

I'm not suggesting that one type of ownership is better than the other. I'm only pointing out that the results of a death can be different.

The simple answer to your question is yes; more than two people can own property as joint tenants with rights of survivorship. Whether there are two of you or 20, the rules governing ownership are the same. If one of the joint tenants dies, his interest is absorbed by the others.

A couple of problems could potentially arise from joint ownership. The obvious one is that you don't want the interests to transfer to the surviving joint owners. If you want your interest to go to your children and they aren't joint owners, then that type of ownership probably isn't the one for you.

Another potential problem is taxation. Remember the presumption is the entire value of jointly held property is included in the first to die's estate. That means if one of 20 joint tenants dies, the entire value of the jointly owned property is taxed in his or her estate. The presumption is rebuttable, but your family might need to prove why the entire value of the real estate shouldn't be taxed.

As long as you understand how joint tenancy works and you are willing to deal with the potential tax headaches, there's not really a downside. Just make sure that all of the owners understand joint tenancy and you should be good to go.

Opinions are solely the writer's. Christopher Yugo is an attorney in Crown Point. Address questions to Chris in care of The Times, 601 W. 45th Ave., Munster, IN 46321 or to Chrisyugolaw@gmail.com. Yugo's information is meant to be general in nature. Specific legal, tax, or insurance questions should be referred to your attorney, accountant, or estate–planning specialist.

Copyright 2014 nwitimes.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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