Understanding the Role of Joint Tenancy in an Oklahoma Estate Plan
We are all looking to find efficient ways to handle our assets in an estate plan. You want to take care of your loved ones while still maximizing your bequests to them and minimizing the taxes that you and your loved ones will have to pay. You have to make decisions about how to achieve these goals. This includes understanding the legal and financial effects of how you hold property in Oklahoma. Joint tenancy is one tool you might consider.
How Joint Tenancy is Commonly Used in Estate Planning
Here’s an overview of how joint tenancy is commonly used in estate planning in Oklahoma:
Avoiding Probate: One of the primary reasons individuals use joint tenancy in estate planning is to avoid probate. Property held in joint tenancy with the right of survivorship passes directly to the surviving joint tenant(s) upon your death. This can save time and money and provide for a smoother transfer of assets to heirs.
Simplified Transfer of Assets: Joint tenancy also offers a straightforward mechanism for transferring assets to beneficiaries. The automatic transfer allows a quick and easy transfer without the need for probate or other legal proceedings. This can be particularly helpful if your spouse or children need money immediately at your death.
Asset Protection: For married couples, holding property in joint tenancy can provide some protection against creditors’ claims. Holding property in tenancy by the entirety offers additional creditor protection for the jointly owned property.
Estate Tax Considerations: Joint tenancy can have tax implications, particularly regarding the step-up in basis at your death. Consult with your experienced estate planning attorney to develop a comprehensive plan that minimizes tax liabilities.
Flexibility and Control: Joint tenancy offers you flexibility and control over jointly owned assets during your lifetime. Each joint tenant can use, manage, or dispose of their interest in the property independently of the other joint tenants. This can be advantageous or not, depending on your circumstances.
It’s important to carefully consider the implications of joint tenancy in the context of your overall estate plan and to explore alternative ownership structures, such as trusts, to determine what might best align with your goals and objectives. You should also be aware of potential risks associated with joint tenancy, such as loss of control over the property, creditor claims, and conflicts among joint tenants. Consulting with an experienced Oklahoma estate planning attorney can help you evaluate your options and develop a customized plan that meets your needs and objectives while minimizing potential risks.
Joint Tenancy Risks and Complications
Joint tenancy has benefits but it also can involve risks. For example, some elderly parents may hold property in joint tenancy with a child in order to avoid probate. This can complicate things among survivors upon the death of a spouse when the spouse did not have a will and part of his or her share passes to the child through intestate laws.
Trust is paramount in a joint tenancy as both parties can take, use, and dispose of joint tenancy assets. Unspoken assumptions, unanticipated needs, or other problems may cause a joint tenant to liquidate assets without the knowledge or consent of the other party. Once a joint tenancy is created in real estate, stock, or bonds, the child has a right to that property and you cannot simply remove his or her name without the child signing over his or her interest.
Other problems can include:
Creditors: You should be aware that assets that are held in any joint tenant’s name are subject to your that joint tenant’s creditors. This opens the assets held to potential seizure and liens. This can become complicated if one of the joint tenants is looking to file for bankruptcy protection. Joint tenancy assets usually become part of a bankruptcy filing and may be liquidated by the bankruptcy trustee as part of the proceeding.
Divorce: A divorce, whether your own, or that of the other joint tenant, may make the assets held in joint tenancy subject to property division in the divorce proceeding.
Incapacity: Incapacity can lead to the incapacitated joint tenant’s interest in the held property to be held in trust for the incapacitated party. This could be a problem if the asset is real estate or some other tangible asset that must be sold to access the value.
Joint Tenancy Alternatives
Consult with an experienced estate planning attorney if you are looking for alternatives to avoid probate. For example, a revocable living trust for your children allows property to pass to them directly outside of probate. An irrevocable trust that holds title to property for the benefit of your child can be used if you need to reduce the value of your estate but want to ensure that the property is used for the benefit of your child while you are living and after your death.
A qualified estate planning attorney can review each of your options and help you decide what type of vehicle works best for your objectives and needs.
Contact an Experienced Estate Planning Attorney in Tulsa
We at Oklahoma Will & Trust take pride in being able to help you solve the estate planning problems that you and your loved ones are facing. We know that these decisions can be both important and difficult. We provide a consultation for any trust or probate matter in Oklahoma. To make an appointment for your consultation at 500 W. 7th St., Suite 104 in Tulsa, OK, call (918) 876-4500. A skilled and sympathetic probate lawyer can help you reach your desired goals.