If you are planning your Texas estate, there are many ways to achieve this goal. Some people prefer to take care of a portion of their estate planning through joint tenancy, which occurs when two or more parties agree to share ownership of a property.
What are the advantages of joint tenancy?
One of the main reasons to consider joint tenancy is to avoid the probate process. Each state has their own exact process for handling the probate of wills. However, many people avoid going through the process because it’s time-consuming, public, and often expensive.
Another advantage of joint ownership is that it avoids will contests. Instead, a title automatically passes to the surviving property owner. This benefit helps avoid anyone coming forth and trying to stake their claim on a will.
What are the disadvantages of joint tenancy?
While there are a few advantages of joint tenancy, it also has certain disadvantages that you’ll want to know about. One major disadvantage of joint tenancy occurs if the other owner isn’t your spouse. Entering into joint title ownership with someone besides your spouse qualifies as them receiving a gift unless they contribute their properties to obtain their share of this joint title.
Joint tenancy can also cause someone to lose their income tax benefits. If someone inherits a home held in joint tenancy, they’re not allowed to sell it without paying income tax.
A title under joint ownership can also become a problem if one of the owners gets incapacitated. If this happens, a probate court would need to approve whether this property could get refinanced or sold.
Joint tenancy is something with many advantages and disadvantages. By understanding the pros and cons of joint tenancy, you can decide whether this arrangement is right for you.