There are several ways you may own real and personal property. The way in which you own property will determine what part of it—if any—you may give away. Moreover, state law defines the types of ownership. If you own property (i.e., real estate) in another state, the laws of that state will apply. For personal property, the laws of the state in which you claim residency will apply.
Joint ownership is a popular way to leave property to loved ones; however, it is not always the best way. There are advantages and disadvantages to joint ownership in an estate plan. In general, the primary advantage of owning property jointly is that your property passes automatically to the surviving joint tenant(s) when you die and probate is avoided. One disadvantage to joint ownership is that the decision is irrevocable unless you get the permission of the joint tenant(s). Another is that, in many instances, you have made a taxable gift to that person or those persons.
An exception to the rule of joint ownership is when adding a joint tenant to a bank account. Adding a person’s name to your account is not an irrevocable decision indicating that you made a gift to that person. It is, however, a decision to take seriously, as the person can withdraw all of the money from your account. It is important to check with the financial institution to determine the rights created when you add a person as a joint tenant to a bank account.
Prepare Your Estate Plan belongs to a series called Legally Secure Your Financial Future. The series also includes information to help you organize important household papers and to communicate your health-care wishes.