The primary benefit of owning a home with someone else is the cost. However, there are pitfalls to joint ownership that you need to know.
You don’t want to find yourself in a joint ownership dispute years down the road. We’ve put together a guide to explain the drawbacks of joint ownership.
Keep reading to learn how to avoid potential pitfalls.
Property May Pass to Unintended Heirs
Joint ownership can create undue complications when the two owners pass away. When two people own a house, the property may pass to an unintended heir with equal shares if both parties did not make provisions in their will.
To avoid this, both parties should make sure to declare their intended beneficiaries in writing. Both parties should also revisit their will every couple of years or whenever the ownership or beneficiaries of the property change.
Additionally, it’s important to make sure both parties are aware of the current ownership status and what would happen if one of them passed away. To prevent uncertain ownership issues, all parties should be familiar with their lawyers as well as their legal rights and obligations.
Partition lawyers from www.underwood.law/santa-ana-partition-lawyers.html can be a big help in this type of pitfall.
Delaying or Failing to Avoid Probate
In most instances, joint tenants are not enough to avoid probate. When one joint owner dies, the surviving owner will have to wait for probate to finish before they can gain full access to the assets. Even if the owner has a will stating who should inherit the assets, probate can be a lengthy and expensive process.
To ensure the full transfer of assets after the death of a joint owner, a living trust or other estate planning documents should be established. Living trusts can provide a more efficient and cost-effective way to transfer assets after death, avoiding the long probate process. It is important to remember that when it comes to avoiding probate, at best it will be delayed.
There is no absolute way to avoid this time-consuming and expensive process. The best way to ensure the efficient transfer of assets after a joint owner has passed is through the use of living trusts and other estate planning documents.
Unintentional Gift Taxes and Death Taxes
Joint ownership can be beneficial in many ways, including when it comes to taxes. However, joint ownership comes with a few pitfalls that can cost you in terms of unintentional gift taxes and death taxes.
To avoid these pitfalls, it is important to draft an appropriate legal document and understand the implications of each type of ownership. For example, if you jointly own an investment property, taxes will be assessed on any gift to the other owner that exceeds the gift and estate tax exemption, and the recipients may have to pay taxes on the inheritance when the other owner passes away.
All About Joint Ownership
Joint ownership comes with both risks and rewards. It is important to be aware of the pitfalls before going into the venture to minimize any losses and disappointments. Property can be legally and safely shared if the right tools, such as a written agreement, are in place.
Have a lawyer review the document to ensure all parties’ rights are respected. Contact an experienced lawyer today to ensure you are taking the proper steps and protections when considering joint ownership.
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