Joint Ownership of Property
Putting various types of property into Joint Tenancy is an easy planning tool since with the passing of one owner the other takes ownership immediately. However, great care must be taken in this area because the creation of joint tenancy, in many cases, creates a gift which often can be a “taxable gift”.
With bank and brokerage accounts switching the ownership to joint tenancy is not usually considered a gift unless the new owner starts withdrawing from the account. However, in the case of a business or real property, transferring the ownership to joint tenancy usually creates an immediate gift of half the value of the asset.
If you do choose to transfer an interest in a business or real property (including personal residences) be sure to obtain a reliable appraisal. And be sure to file a gift tax return. Also, be sure your state allows joint ownership.
Obviously estate and gift tax issues arise anytime property is transferred. As always, seek professional help. There is just too much money at stake when one’s total assets approach a current fair market value of around $1 million.
For personal net worth’s of less than $1 million, things can be much simpler. Putting financial assets into joint tenancy with a trusted child and creating of simple living trust, may be an easy way to have your assets transfer to the next generation with little or no hassles. Do-it-yourself books and software are readily available and really do make it simple. A good rule of thumb is to try and find a book written with your state’s laws in mind. If this is not possible, ask around for recommendations.
In my own mother’s case, we created a straight forward living trust and she transferred all her financial accounts into joint tenancy with my sister. With this small amount of estate planning, the most difficult part of transferring her assets was deciding who would get the oak dinning table and chairs. No problem there either, I got them.
