Legacy Assurance Plan: Joint Tenancy With Right of Survivorship

Showing posts with label Joint Tenancy With Right of Survivorship. Show all posts

Tuesday, December 5, 2017

Joint Tenancy With Right of Survivorship | It May Be A Risky Idea if Not Used Properly

Summary: Joint tenancy with right of survivorship is a means of owning property. It can be a useful form of ownership in some situations. As a method for avoiding probate, however, this tool can create many problems. It may limit your flexibility as a homeowner to sell or refinance, it may expose your home to risk from legal judgments incurred by your joint tenant and it may create confusion regarding each person’s ownership interest. For avoiding probate, there are often better techniques, such as revocable living trusts, which can effectively avoid probate without the risk and loss of freedom.

People have lots of ideas about how best to avoid probate. Obviously, people seek a plan that is as effective as possible. They also often seek options that involve a minimum of expense and complication. Sometimes, though, just because an option is the fastest or the cheapest, it doesn’t mean that it is the best.

One example of this is the type of ownership of property known as “joint tenancy with right of survivorship” (JTWROS). There are circumstances where this can be a useful tool. Using this as a form of estate planning geared to avoid probate, however, often isn’t a good idea.

There can be many problems with this type of estate planning. First off, creating a JTWROS means that whomever you’ve formed the joint tenancy with has certain rights as soon as you create the tenancy. For example, after you’ve created your JTWROS, you have to get your joint tenant’s approval to sell or to re-finance the house.

Additionally, it creates certain risk exposure. If your joint tenant gets sued and loses, gets divorced, or has any other judgment assessed against him/her, then your home could be involved in satisfying that judgment, which could even mean a forced sale of the home!

This type of arrangements can also lead to confusion. Take, for example, the case of a woman named Molly who lived in Tennessee. Molly and her husband, James, owned a property together. Three years after James died, Molly created a JTWROS with herself and her son, Darryl, as the joint tenants. One year after she created that JTWROS, in 2010, Molly signed another deed. This one gave all of her rights to the property to Darryl Jr. (Darryl’s son.)

In 2013, Molly died. What ensued was a prolonged court battle to determine who had what legal rights to the property originally purchased by James and Molly. Did the 2010 deed mean that Darryl Jr. owned the whole property? Was the 2010 deed invalid (since Darryl Sr. didn’t sign it,) meaning that Darryl Sr. owned the whole property? Or did the father and son now share the property as co-owners?

Ultimately, the case went all the way to the Tennessee Supreme Court, which concluded that, when Molly created the 2010 deed, she indirectly and effectively ended the JTWROS. The 2010 deed transferred her rights to Darryl Jr. and meant that the two men, from that point forward, co-owned the property as what’s called “tenants in common.”

When Molly created these deeds, was this outcome what she had intended? It is impossible to say for sure. What we can say for certain is that, at best, Molly’s plans accomplished her goals but only after years of court wrangling and litigation going all the way to the Supreme Court. At worse, her home was tied up in litigation AND her plans failed to accomplish her goals. Either way, it wasn’t a positive outcome.

Other options might have been more advantageous. A living trust might have been one possible superior approach. With a properly executed living trust that had the home funded into it, Molly could have initially designated Darryl Sr. as the intended recipient of the home upon her death. If she later decided to give the home 100% to Darryl Jr., she could have made that change simply by amending her trust. If she decided to leave the home 50-50 to Darryl Sr. and Darryl Jr., she could have done that, as well. Again, it would have required only a simple amendment to her trust.

There are many ways to avoid probate. The key is to work with knowledgeable professionals and make sure that the plan you pick is the best one for you.

This article is published by the Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services-company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at www.legacyassuranceplan.com.

This article written and published by:

Legacy Assurance Plan

8039 Cooper Creek Blvd

University Park, Florida 34201

844.306.5272 (Phone)

info@legacyassuranceplan.com (email)

@assuranceplan

#legacyassuranceplan

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Monday, April 10, 2017

Using 'Joint Tenancy With Right of Survivorship' Accounts as Part of Your Estate Plan

Summary: There are many techniques that can help you avoid the potential costs and delays of probate. Just because all of these techniques can be entirely effective at avoiding probate does not, however, mean that they are all equal. With some of these techniques, the benefits of probate avoidance come with a downside of greater risks -- risks that your planning goals may be stymied, or that your plan could end up requiring costly and time-consuming court litigation to sort out.

Joint tenancy with right of survivorship (JTWROS) accounts, as well as pay-on-death or transfer-on-death accounts, can be wonderfully useful tools in some situations. Sometimes, they can be a helpful part of your overall estate planning. In certain circumstances, they can be a simple and low-maintenance way ensure that your assets pass to your desired beneficiaries without the hassles, costs and delays of probate administration. However, in many other situations, they can be risky way to try to avoid probate. They can potentially put your wealth in jeopardy if the person you've added to your account decides to use the account funds for his own purposes, rather than your goals. Alternately, even if the person you've added to your account is above reproach, your assets could still be at risk if that person divorces or is successfully sued by someone. What's more, they ca also pose the potential of requiring expensive and stressful court litigation in order to get your wealth to the beneficiaries that you wanted to have it.

Take, for example, a case decided by the courts in September 2016. The case involved the estate of man named John, who was a senior in declining health in the final years of his life. He had both a checking account and a savings account. He had several people listed on his checking account as authorized signors. They included, in addition to John, his daughter, a grandson and the grandson's wife. On the savings account, authorized signors included John, the daughter and the grandson's wife.

The problems arose shortly after John died. First, the grandson withdrew $22,000 from John's checking account. The grandson's wife then withdrew nearly $26,000 from John's savings account. This sum of almost $48,000 represented roughly 50% of the total amount in the two accounts combined. The couple claimed that they were entitled to the money because the accounts were joint accounts with right of survivorship. In an account that is truly a JTWROS, all of the "tenants," or owners of the account, have equal claims to the account's assets in the event of the death of the account holders.

In John's case, the problem that led to the court battle was a lack of clarity. If the account truly was a JTWROS asset, then the grandson and his wife had the legal right to withdraw the funds that they withdrew for whatever purposes they wanted. However, John's daughter, who was acting on behalf of John's estate, claimed that the grandson and wife were not joint tenants; they were only added to John's accounts as signatories as a convenience to John. Ultimately, the courts sided with the daughter. The trial court ruled that the grandson and wife didn't have any evidence to show that John intended for the money in his checking and savings to pass to the daughter, grandson and grandson's wife as a JTWROS account would. If the outcome reached by the courts was not what John intended, then at least some of the objectives of his estate plan were frustrated. Even if the outcome did reflect John's goals for the money in his checking and savings, which appears to have been more likely, it still took an expensive and time-consuming court battle to achieve this end.

Careful planning can potentially help you avoid an unfavorable situation like what happened with this man's estate. There are ways to create a plan that will take the guesswork out of your planning goals. One example is a revocable living trust, which can allow you to dictate, with great specificity, exactly what you want to achieve with regard to each of your assets and each of your beneficiaries. In addition to this, it can also benefit you by avoiding probate while at the same time sidestepping some of the risks involved with other probate-avoidance techniques like JTWROS accounts.

This article written and published by:

Legacy Assurance Plan

8039 Cooper Creek Blvd

University Park, Florida 34201

844.306.5272 (Phone)

info@legacyassuranceplan.com (email)

@assuranceplan

#legacyassuranceplan

Click Below To See Other Legacy Assurance Plan Related Sites:

https://www.facebook.com/legacyassuranceplan

http://legacyassuranceplan.tumblr.com/

https://twitter.com/AssurancePlan

https://www.linkedin.com/company/legacy-assurance-plan?trk=biz-companies-cym

https://plus.google.com/u/0/b/108736377719628241578/

https://www.youtube.com/channel/UCx9HBYFIYdohfnrfW_XRkIQ

Thursday, March 30, 2017

Joint Tenancy With Right of Survivorship | Possibly a Risky Proposition

Summary: There are many techniques that can help you avoid the potential costs and delays of probate. Just because all of these techniques can be entirely effective at avoiding probate does not, however, mean that they are all equal. With some of these techniques, the benefits of probate avoidance come with a downside of greater risks -- risks that your planning goals may be stymied, or that plan could end up requiring costly and time-consuming court litigation to sort out.

Joint tenancy with right of survivorship (JTWROS) accounts, as well as pay-on-death or transfer-on-death accounts, can be wonderfully useful tools in some situations. Sometimes, they can even make up a helpful part of your overall estate planning. In certain circumstances, they can be a simple and low-maintenance way ensure that your assets pass to your desired beneficiaries without the hassles, costs and delays of probate administration. However, in many other situations, they can be risky. They pose the potential of having your money wind up in the hands of people other than the ones you wanted or, only less problematically, requiring expensive and stressful court litigation in order to get your wealth to the beneficiaries that you wanted to have it.

The problems arose shortly after John died. First, the grandson withdrew $22,000 from John's checking account. The grandson's wife then withdrew nearly $26,000 from John's savings account. This sum of almost $48,000 represented roughly 50% of the total amount in the two accounts combined. The couple claimed that they were entitled to the money because the accounts were joint accounts with right of surviviorship. In an account that is truly a JTWROS, all of the "tenants," or owners of the account, have equal claims to the account's assets in the event of the death of the account holders.

Using these types of accounts as a probate-avoidance technique can be harmful in some situations. They can potentially put your wealth at risk if the person you've added to your account decides to use the account funds for his own purposes, rather than your goals. Alternately, even if the person you've added to your account is above reproach, your assets could still be at risk if that person divorces or is successfully sued by someone.

In John's case, the problem was a lack of clarity. If the account truly was a JTWROS asset, then the grandson and his wife had the legal right to withdraw the funds that they withdrew. However, John's daughter, in her lawsuit, claimed that the grandson and wife were not joint tenants; they were only added to John's accounts as signatories as a convenience to John. Ultimately, the courts sided with the daughter. The trial court ruled that the grandson and wife didn't have any evidence to show that John intended for the money in his checking and savings to pass to the daughter, grandson and grandson's wife as a JTWROS account would. If the outcome reached by the courts was not what John intended, then at least some of the objectives of his estate plan were frustrated. Even if the outcome did reflect John's goals for the money in his checking and savings, it took an expensive and time-consuming court battle to achieve this end.

Careful planning can potentially help you avoid an unfavorable situation like what happened with this man's estate. There are ways to create a plan that will take the guesswork out of your planning goals. One example is a revocable living trust, which can allow you to dictate, with great specificity, exactly what you want to achieve with regard to each of your assets and each of your beneficiaries. In addition to this, it can also benefit you by avoiding probate while also sidestepping some of the risks involved with other probate-avoidance techniques like JTWROS accounts.

This article written and published by:

Legacy Assurance Plan

8039 Cooper Creek Blvd

University Park, Florida 34201

844.306.5272 (Phone)

info@legacyassuranceplan.com (email)

@assuranceplan

#legacyassuranceplan