Because estate planning is often perceived as a complicated process, Texans assume there are other options that are an acceptable substitute for an estate plan. One such example of this is joint tenancy. Joint tenancy is a legal arrangement in which two or more people own a property together with equal rights. However, joint tenancy on its own has major drawbacks that are often unexpected. Below are answers to common questions about the necessity of a Houston estate plan, and why a joint tenancy is not sufficient.
How Does Joint Tenancy Work?
Joint tenancy is property ownership between two or more parties. The parties come together to make a legally binding agreement through a deed, and the deed then will name the two owners as the joint tenants. While joint tenancy is most often utilized by couples—both married and unmarried—it can also be used by relatives, friends, or even just business associates. Because both parties have a claim to the property, they also share the benefits and downsides—be it mortgage payments, property taxes, or profits after sale. Besides a deed, joint tenancy can also apply to personal and business banking accounts, business assets like real estate, investment properties, and vehicles.
A joint tenancy creates a right of survivorship, where if one person dies, the other automatically assumes ownership of the property. This means that the property will not go through probate court—when a court oversees the distribution of property after the person has passed. Because of this, many people assume that this is a sufficient substitution to having an estate plan in place, where one person would bequeath the property to the other anyway. However, this is not the case.
What Are the Drawbacks to Not Having an Estate Plan in Place?
While joint tenancy gives all named assets to the other person when the first tenant passes away, the property will go through probate when the second joint tenant passes away. In this case, the second joint tenant will still need to create an estate plan to give the assets under the joint tenancy to their loved ones after they die. It is better to create an estate plan that incorporates joint tenancy rather than assuming joint tenancy is enough.
If the second joint tenant does not create an estate plan before they pass away, the assets will be distributed according to the probate laws of Texas—not who the person intended. This means the person’s closest blood relative will get the assets: not according to personal relationships, but how Texas defines closest blood relative. For many, this is upsetting, so it is better to include a joint tenancy as part of an estate plan.
Because there are benefits only estate plans can provide, individuals without an estate plan should immediately contact an attorney who can help begin the process.
Contact a Texas Estate Planning Attorney
Because joint tenancy is not a substitution for an estate plan, individuals looking to create an estate plan should contact the Houston estate planning attorneys McCulloch & Miller, PLLC. Our attorneys will demystify the estate planning process and take the burden off of you and your loved ones. Because our attorneys have drafted a diverse range of estate plans, we will make an estate plan that meets your specific needs. To schedule a consultation, give us a call today at 713-333-8900.