The simple answer to this question is yes, Oklahoma will allow you to create a joint tenancy with your child. However, many people fail to realize the risks they take when they create a joint tenancy with a child. Some parents create a joint tenancy in order to avoid probate, especially when the parent is elderly and he or she wants to save their child the trouble and expense of the probate process. Other parents may have a joint tenancy issue because of 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.
Whether you create a joint tenancy with your child by design or you hold joint tenancy due to an intestate inheritance, the risks associated with having joint tenancy with a child are the same.
Problems that may arise when you create a joint tenancy
Having joint tenancy may put your investment and interests in jeopardy under certain circumstances. These problems may apply to both adults and minor children. The key thing to remember with some risks of joint tenancy is that they may not apply to a minor child right now; however, once that child reaches adulthood, you could be facing these problems.
- Unable to remove the child’s name – 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.
- Creditors – Assets that are held in your child’s name are subject to your child’s creditors. If your child owes money, the creditor may be able to place a lien on the property and/or seize the property to satisfy the debt.
- Bankruptcy – If your child files bankruptcy, his or her interest in the asset will become part of the bankruptcy estate. In some cases, this may mean that the bankruptcy trustee can liquidate the asset to pay your child’s creditors.
- Divorce – In the event of a divorce, any asset in which your child owns an interest through joint tenancy will be subject to a claim by your child’s spouse. The asset may be tied up in a dispute over property division.
- Unauthorized withdrawals – When you create a joint tenancy with your child, your child has the right to withdraw funds from any jointly held accounts. Your child may be influenced by others to access these funds without your knowledge or consent.
- Incapacity – In the event that your child becomes incapacitated, his or her interest in any joint property will be held in trust for the benefit of the child. You will only be able to access your ½ interest in the asset. This could be a problem if the asset is real estate or some other tangible asset that must be sold to access the value.
Alternatives to creating a joint tenancy
If you are creating a joint tenancy to avoid probate or to attempt to protect your child’s interest in property, there are other alternatives to accomplish this goal that do not have the risks associated with joint tenancy. An experienced Tulsa estate planning and trust attorney can explain several options available to you.
For example, you can create a revocable living trust for your children so that the property passes directly to the beneficiaries outside of probate. There is also an irrevocable trust that will hold title to the property for the benefit of your child in the event 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 trust attorney can review each of your options and help you decide what type of trust satisfies your desires and meets your needs.
Contact an Experienced Estate Planning Attorney in Tulsa
When you need the services of an experienced estate planning attorney, call Oklahoma Will & Trust. Tulsa Estate Attorney Jason M. Lile has the experience and knowledge to assist you with all of your estate planning and probate needs. As a skilled Tulsa estate planning attorney, Jason M. Lile knows the advantages of protecting your estate and ensuring that your wishes are followed.
Contact an experienced Tulsa estate planning attorney today for a free consultation about the best approach to protecting your legacy. Call (918) 876-4500 to schedule your free consultation. We are conveniently located at 201 W. Fifth Street, Suite 404 in Tulsa, OK.