Why Joint Ownership May Not Be the Go-To Estate Plan for Spouses
If you’ve recently tied the knot or have been married for a while and have acquired more assets, you might be considering joint ownership. While it seems like a straightforward and convenient option, it might not always be the best choice depending on your situation.
What Is Joint Ownership?
After getting married, some couples choose to add each other to their existing bank accounts, brokerage accounts, and real estate as joint tenants with rights of survivorship (JTWROS). This means both of you have equal rights to the property, and if one of you passes away, the other automatically inherits the deceased’s share without needing to go through probate.
For example, if you and your spouse own a bank account as JTWROS and one of you dies, the surviving spouse becomes the sole owner of the account once the necessary documentation is provided. While this might seem like an easy solution, there are some potential pitfalls.
Issues with Joint Ownership
Joint ownership can lead to problems, especially if the relationship is unstable. Here are some common issues:
- Decision-Making: Neither person can sell, lease, gift, or refinance the property without the other’s consent, which can be problematic.
- Bank Accounts: Both people usually have unrestricted access, meaning either person could potentially drain the account without the other’s consent.
- Probate Avoidance: While JTWROS avoids probate, the surviving spouse can use or gift the asset however they wish, which might not align with the deceased spouse’s wishes.
- Inherited Property: For inherited or separate property, the surviving spouse might not follow the deceased spouse’s wishes, especially in blended families, potentially disinheriting children from a prior relationship.
The Better Option: A Comprehensive Estate Plan
A comprehensive estate plan, such as using a trust to hold your assets, can better control and protect your property. Whether due to creditor issues, incapacity, or death, the right estate plan ensures you and your spouse can continue enjoying your assets as intended while minimizing potential taxes and court costs.
Bottom Line
It’s important to consult with an estate planning professional to understand your options. If you’ve recently gotten married or are acquiring additional assets with your spouse, contact us at 336-373-9877 to learn about the best approach to owning your assets.
