Most married people tend to use the traditional way of owning property together, using "joint tenants with right of survivorship," known in estate planning circles as "JTWROS." Just as the name describes, when one of the spouses passes away, the surviving spouse becomes the sole owner of the property.
This has benefits for estate planning, as the property does not have to go through probate. However, there are potential drawbacks. If one of the owners is in debt, his or her creditors may be able to go after the property held jointly. If a parent holds property as a joint tenant with a child, it might make it so other children do not receive a fair inheritance.
Recently, Investor's Business Daily discussed alternatives to joint tenancy in "Best Ways To Title Your Assets — Avoid Traps," including:
- Convenience Accounts – Sometimes an elderly parent will want a child to be able to pay the parent's bills. The temptation might be to add the child to a bank account as a co-owner. This is often a mistake. In some states convenience accounts allow the parent to remain as the sole owner of the account while adding the child as a person who can withdraw funds from the account and write checks.
- Tenants in Common – Property can also be held as tenants in common. Unlike joint tenancy, each owner's share of the property is kept separate and does not automatically pass to the other owner upon death.
If you have questions about these or other alternatives to joint tenancy, consult with an estate planning attorney.
Reference: Investor's Business Daily (October 23, 2015) "Best Ways To Title Your Assets — Avoid Traps,"