Joint Tenancy to Avoid Probate
In Florida, the type of property ownership can affect you in probate court. If the property is held in joint tenancy with the right of survivorship, it will pass to the surviving owner outside of probate. It can have a significant impact on the administration of your estate after your death.
Joint tenancy with the right of survivorship is a type of property ownership where two or more people own property together. Each party has equal rights to the property. The property can be real estate or personal property (bank accounts, brokerage accounts, cars, etc.). In contrast to tenants by the entries, you do not need to be married or related in any way to hold property in joint tenancy in Naples.
How Does Joint Tenancy Avoid Probate in Naples?
In Naples, if the property is held in joint tenancy with rights of survivorship, it will automatically transfer to the surviving owner upon the other owner’s death. The surviving owner will automatically own 100% of the property, and ownership will switch to tenancy in common. The property does not need to go through probate.
Typically, the surviving tenant will simply have to complete a form and provide a copy of the death certificate to complete the process of transferring ownership. Banks, realtors, and title companies will recognize the property as being the surviving tenant’s sole property.
What are the Benefits of Using Joint Tenancy to Avoid Probate in Naples?
There are several benefits of using joint tenancy to avoid probate in Naples.
• Save Time. Probate is a court process that can take months, if not years, to be finalized. In comparison, property held in joint tenancy is transferred immediately at death. There is no waiting period.
• Save Expense. Probate can be a costly process. Court costs, attorney’s fees, executor fees, and accounting fees can add up quickly. There is no fee when the jointly held property is transferred to the surviving owner.
• Privacy. Wills and probate proceedings become part of the public record. Property transferred outside of probate stays private.
What are Potential Problems with Using Joint Tenancy to Avoid Probate in Naples?
There are some risks of using joint tenancy to avoid probate in Naples, including:
• Only Delays Probate. If there is only one owner after a joint tenant dies, the property will revert to being a tenancy in common. After the sole surviving owner dies, it will pass through their probate estate unless further steps are taken to avoid probate. Likewise, if both owners die at the same time, the property will pass through probate.
• Unintended Consequences. Beneficiaries under your will may be unintentionally disinherited if you are not fully aware of Florida probate laws. A beneficiary will not inherit the property owned by joint tenancy unless they are one of the other joint tenants. The joint tenancy with rights of survivorship trumps anything written in a will.
• Unnecessary Taxes. When you place a non-spouse on your property as a joint tenant, you are gifting one-half of the property value. You will have to pay gift tax on anything over the gift tax exemption. Furthermore, the surviving joint tenant does not get a step-up tax basis. If the surviving owner sells the property, they can end up paying significantly more in income taxes than if they inherited the property through a will or trust.
• Creditor Claims. Property held in joint tenancy is not protected from the judgment creditors of one of the owners. A creditor can place a lien against the debtor’s portion of the property, and the debtor’s interest can be sold without involving the other tenant. It does not matter if the other owner had no idea about the creditor or debt.
• Loss of Control. If the property is a bank or brokerage account, one of the joint tenants can remove assets without the approval or even notification of the other owner. Additionally, a co-owner could prevent you from selling or borrowing against certain property.
If your primary goal is to avoid probate, speaking with a qualified estate planning attorney is critical. There are various ways to avoid probate in Naples so discussing whether the joint tenancy is right for you in this instance is important.
Call A Naples Estate Planning Attorney
If you have questions about joint tenancy, you should contact an experienced Naples estate planning attorney. Contact our offices today at (239) 449-6150 or use our web form to set up a free consultation.