What is joint tenancy with rights of survivorship?
When property is held in joint tenancy with rights of survivorship by two or more people, upon the death of one of the owners, all of his or her interest in the property is automatically transferred to the surviving owners.
Can a married couple use joint tenancy until one spouse dies, then set up a trust for the survivor?
Yes, but this approach unfortunately has several problems associated with it. There is no guarantee that the surviving spouse will have time to set up a trust after the first spouse dies, or, more to the point, will actually get around to setting up a trust, regardless of the amount of time available. This method also loses the opportunity for tax planning because, like an outright gift, joint tenancy lumps all the assets into one spouse's estate.
What if I create a joint tenancy with my child?
This is a potentially disastrous way to plan an estate. The problem with putting your child's name on the title to your property as a joint tenant is that while it will avoid probate, creditors of the child will be able to reach the joint tenancy property. It may also create a taxable gift when none is expected, and may be different from the way you want your property distributed. You also lose complete control of your property since the child must now agree to sign off on any sale, refinance or lease of the property. There are also potential adverse tax consequences from transferring property using joint tenancy.
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