Real Property - Joint Tenants
This is one type of property that you must have a title in order to have any rights in it. How do you do this?
Joint Tenants….and why it may be a bad idea. Each of the joint tenants owns the same interest in the property and has the right of survivorship. All co-owners must take title at the same time. Upon death of a joint tenant the surviving joint tenant(s) own the entire interest. This is usually a problem for second marriages as each spouse may want to direct disposition of their property to their heirs and not to the heirs of the other spouse.
If joint tenancy is not held by a husband and wife, each joint tenant is free to sell his interest. The new title is held as tenants in common.
Here are some of the reasons why joint tenancy may not always be a good idea (covers real and personal property examples):
- Capital Gains Taxes
- Shared Control
- Creditor Problems
- Inheritance Tool
- Problem Marriages
- Incompetence-Guardianship Issues
- One Time Payment at Death
Loss of control, especially if you hold with a child or another person. Cannot sell or mortgage without the other party agreeing to the transaction (have to go to court to partition). Capital gains taxes are due if sold after death (as is usually the case). The co-owner’s creditors may come after the property or the co-owner may empty the entire (bank) account.
Capital gains tax example from the Revocable Trust section. Only the deceased spouse’s one half of the original cost basis gets stepped up to one half of the market value, i.e., $625,000. Yours stays at $30,000 for a total of $655,000. This leaves you with the gain of $545,000. You have to pay capital gains tax in case of sale (as many widowed people do in order to “get away” from the memories.) Depending on when you sell and tax rates at the time, you may end up paying tens of thousand of dollars in capital gains taxes.
|Areas of Practice:
Commercial Law & Contracts
Mergers & Acquisitions
Science, Computers, & Tech
Wills, Trusts & Estate Planning
|We take pride in providing personalized legal services for your individual or business needs. Our practice includes: business start up and funding, business buying and selling, business succession planning, business reorganization, estate planning, power of attorney, end of life decisions, lawsuit protection and debt settlement or consolidation. We are also intellectual property attorneys with experience in electrical, software, mechanical and biotech technologies.