Perils of joint ownership

To avoid wills, some clients put property under joint ownership. It’s their biggest asset and they figure, “Why bother with the hassle of a will?”

This isn’t always prudent, because it can cause unintended tax and estate-planning consequences.

These stories can help you determine if joint property ownership is right for your clients:

Joint property ownership: problems and pitfalls

Joint ownership of property is a popular estate-planning tool. If a property is held jointly with right of survivorship (as opposed to, for example, as tenants in common) when the first joint owner dies, the surviving joint owner in the normal course automatically becomes the owner of all of the property.

The joint tenancy trap: Joint names no longer ensure ownership

Joint ownership is nothing new. In fact, it’s as common a practice as naming beneficiaries in registered plans and life insurance. Still, in this day and age, the joint tenancy snafu can be one of the biggest traps in personal financial planning.

Tax consequences of owning property jointly

Moving property from sole ownership into joint ownership with a right of survivorship is a particularly seductive means of reducing exposure to probate taxes. It can often be done quickly and relatively inexpensively. However, such a transfer can represent a dangerous income-tax trap.

Five risks to holding property jointly

Holding property jointly has long been called the “poor man’s will”—a way for a person to transfer wealth on death without spending the money to draw up proper documents. It’s also an appealing way for married couples or parents to minimize probate taxes in provinces where rates are high.

How to avoid sibling rivalries over jointly held property

Many parents are choosing to hold property jointly with one or more children with a right of survivorship. The goal is to reduce probate taxes and facilitate estate administration. If the parent dies first, the child or children will own the property, without exposing that jointly held property to probate taxes or to the probate process.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.