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Q: It looks like adding someone as a joint tenant on a home accomplishes the same thing as a Transfer on Death, or TOD, deed. Is there a reason that one is preferable to the other?

A: I'm guessing what you mean by "accomplishes the same thing" is that you want someone to own the property after your death without going through probate. If that is your goal, then yes, it is likely that a beneficiary under the terms of TOD deed and a surviving joint tenant will end up owning the property after your death.

However, adding someone as a joint tenant and naming someone beneficiary under a TOD deed are not the same thing and should not be confused. The end result may be similar, but how you get there is very different.

When you add someone as a joint tenant with rights of survivorship, you have given them a present interest in the property. What that means is the joint tenant becomes a part owner. That doesn't mean that you can point to one side of the house and say that half is mine and this half is yours. Rather, it means that you and the joint tenant each own one half of the whole.

When one of the joint tenants dies, the surviving joint tenant owns the whole. Title is acquired by the surviving joint tenant without probate. The deceased joint tenant's ownership is transferred to the surviving joint tenant at the time of death as a matter of law.

A surviving joint tenant affidavit should be recorded to document the transfer, but the actual ownership interest transfers at the moment of death.

On the other hand, a TOD deed does not create a present interest in the property. In other words, the TOD beneficiary doesn't own anything except an expectancy during the grantor's lifetime. The TOD beneficiary's interest is created at the moment of the death of the grantor.

Until that time, the grantor has complete control of the property and can do anything that they like with it, including transferring it to someone else. The TOD beneficiary has no rights to the property until the time of death.

The important thing to remember is that a joint tenancy creates an immediate interest while the TOD deed does not. Once you add the joint tenant to the property, you have given that person a ownership interest and they have all the rights and obligations that go along with it.

That means that the joint tenant has to consent to a transfer of the ownership and can even seek to partition the property and force its sale. If a creditor of the joint tenant obtains a judgment, the creditor can lien the property. On the other hand, a TOD deed can transfer the property at death without creating a present interest.

Personally, I'm not a big fan of creating joint tenancies. The present interest can create too many headaches and the benefits can be accomplished in other ways.

I'm not suggesting using a joint tenancy is never a good idea, only that it shouldn't be your first go to fix.

Christopher W. Yugo is an attorney in Crown Point. Chris’ Estate Planning Article appears online every Sunday at www.nwi.com. Address questions to Chris in care of The Times, 601 W. 45th Ave., Munster, IN 46321 or to Chrisyugolaw@gmail.com. Chris’ 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.

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