One of the primary goals of Virginia Estate Planning is to avoid probate. A commonly used tactic to avoid probate is to place certain assets into joint ownership with a right of survivorship. Also sometimes called a “Joint Tenancy,” this legal structure allows the surviving co-owner of the asset to become the sole owner automatically at the other co-owner’s death without the rigors of probate.
This can be an effective strategy in the right situation, but there are some dangers to adding joint owners to your valuable assets. You should consult with a seasoned Virginia Estate Planning Attorney from Promise Law before retitling any assets into joint tenancy as part of your estate plan. Below, we review some of the dangers of this estate planning tactic.
How Could Joint Ownership Cause Me Harm?
Consider these possible dangers to adding joint owners to your assets in Virginia.
- Your Asset Becomes Their Asset – In the event your home or bank account co-owner gets sued, cannot pay a debt, or files bankruptcy, your asset is now at risk of being seized to cover their responsibilities.
- Your Asset is at Risk from Divorce – If your co-owner ends up getting a divorce, the offending spouse can involve your asset in the divorce proceedings and demand a share in the settlement.
- Your Asset Becomes Fodder for a Family Feud – If your co-owner is a child, and your asset passes to them on your death, this could spark a feud over unfair division of your estate.
- Your Asset Becomes a Tax Burden to Your Co-owner When You Die – Gaining your share of the property or account can result in an unfavorable tax burden when you die. Plus, they could miss a tax savings if the asset grew in value between the time of purchase and your death.
- Your Asset Gets Squandered – The original plan was to add a child to the title or account, but the asset would remain yours – until temptation rears its ugly head or your child falls on hard times and needs to liquidate the asset to save their own skin.
- Your Co-Owner May Use the Asset for Their Own Care – What happens if your co-owner is in a serious accident or has a health reversal and becomes incapacitated? They may need to liquidate your asset to pay for their own care, leaving you little or nothing for your future care needs.
- The Wrong Person Can End Up in Control of Your Asset – What if your co-owner sets up a durable power of attorney naming their spouse or someone else as their agent? If anything happens to them, their agent (whom you did not choose) has access to your assets.
- Control of Your Asset is Restricted – You cannot sell, refinance, or otherwise liquidate a co-owned asset without the express consent of the co-owner. You may wish to sell your home and downsize, but if a child who is the co-owner wishes to keep it, they can block your efforts.
Get Help with Your Virginia Estate Planning
Stories abound of situations with joint ownership that caused nothing but problems. Money can have a strange effect on people – and no one thinks anything like that could happen to them. Promise Law in Newport News, Virginia, has seasoned Virginia Estate Planning Attorneys who can help you avoid serious mistakes and pitfalls while planning effectively for the future.
Begin by registering for our Estate Planning Workshop which shows you how to avoid serious mistakes while creating a solid plan. After attending a workshop, you will receive a complimentary consultation with one of our Estate Planning Attorneys. Get registered today and begin building a path to a more secure future for you and your loved ones.