Joint tenancy is a great tool for estate planning but it does not work in every situation. It is typically used for couples or business partners. As a Tampa Bay Estate Attorney, I’m sometimes asked the question “Will joint tenancy be a good way to pass assets to our child?” Normally the answer is “no” as this can cause a number of problems.
Problem 1: It gives your child joint ownership. Having your child seamlessly take over ownership of your home may seem like a good idea, but it can cause a number of issues. It is important to remember that once you add your child’s name to the deed, they are part owner of the property. So, if you decide to sell your house but your child does not agree, you may not be able to make a move. As the joint owner, your adult child has to sign off on any decisions you make about your assets.
Problem 2: It can cause the bank to freeze your bank account after your pass away. The bank may freeze your account for a couple of reasons if you pass away and have a joint tenancy. For example, if you have debt when you pass away, the bank may freeze the account so that your child can not liquidate your assets in an attempt to avoid the debt. They may also freeze the account if the courts believe that your child was put on the account just for convenience and they don’t actually contribute to the account. If the bank freezes your account for either of these reasons it may actually slow down the process of being able to pass on your assets to your heirs.
Problem 3: It will give your child survivorship rights. This means that all your assets will now belong to your child which might not be exactly what you intended. If you write a will and set up specific guidelines about to whom and when your assets are to be distributed (i.e. I want Johnny to split the bank account we share with his sister Betty when I die), none of that will matter because your child has survivorship rights to the funds. That means he or she has no obligation to follow your will or wishes because he or she is now the sole owner of the asset in question.
Before you add your child to your bank accounts, deed to your home, or any other asset, give us a call at 813-438-8503. That way, we can help you avoid any unintended consequences.