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House Joint And Tenants With Children
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Joint tenancy can be described as ownership of real estate property by two or more persons, each of whom have an undivided interest with the right of survivorship. This means that the parties own the property together, and on the death of one of the joint tenants, the entire rights on the property passes to the surviving joint tenant.
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The survivor can even sell the property and only requires a death certificate of the other tenant to prove his/her ownership. In case of joint tenancy, the transfer of ownership is automatic. This cannot be altered even by a will. Even when the decedent wants to transfer his share of ownership to any other person, it becomes ineffective as nothing gets transferred under any will in this type of arrangement.
Joint tenancy is the most common mode of ownership agreement that is utilized in ninety-five percent of married couples’ estate plans. Since, joint tenancy does not require any will or any other extensive real estate planning, it does not go to the probate court on the death of the first joint tenant. If the surviving tenant is a spouse, there is no requirement of paying gift tax and death tax.
However, some real estate owners also use joint tenancy as a way to protect children’s inheritance. According to legal experts, putting a child in a joint tenancy is not a very good idea. The only thing it will avoid is a probate for transferring ownership rights. Other than that, there are no significant benefits. This is an excellent way of taking control over property by creditors of the child. Another disadvantage is that the surviving tenant other than spouse needs to pay gift taxes to the government. Even when the child plans to sell the house, he would be required to pay unnecessary capital gains taxes. In case the parent has to be hospitalized into a nursing home and needs to qualify for a medical insurance, the state government will have a lien on the property for any amount paid towards Medi-Cal benefits. This means that the government can have legal possession of the property in order to secure the payment of the amount paid to the parent.
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