Boulder City Magazine® November 2009 Issue
by Bruce L. Woodbury, Esq.
Jolley, Urga, Wirth, Woodbury & Standish
Alternatives To Joint Tenancy Deeds
Title to real estate owned by two or more individuals is often held in joint tenancy, especially when the co-owners are spouses or close relatives. The legal effect of joint tenancy ownership is that title passes to the surviving joint owners without probate proceedings. Clients frequently ask about putting their property into joint tenancy with children or other beneficiaries.
Boulder City Magazine®
|There are several reasons to be cautious about joint tenancy arrangements, especially with someone other than a spouse. First, upon the death of one joint owner, the survivor will not receive a full step up in the cost basis of the property for tax purposes. Second, your property could become liable for the debts of the other joint tenant. Third, you cannot sell the property or revoke the joint tenancy without the joint owner’s consent.
In addition, creating a joint tenancy with an intended beneficiary can create liability for gift tax and real property transfer tax.
The best alternative to joint tenancy ownership is a living trust, which avoids probate, maximizes income tax advantages for the beneficiaries, retains control over the property, eliminates liability for gift tax and transfer tax, and also minimizes any potential for federal estate tax.
The next best choice for spouses is to hold title as community property with the right of survivorship, which, unlike joint tenancy, gives the surviving spouse a full step up in cost basis when the property is sold.
Another option for transferring title to others is a special deed which takes effect only upon the death of the grantor. For real estate, this type of deed can achieve most of the advantages of a living trust, and it can be revoked at any time.
Decisions of this nature should be made only after consultation with an experienced attorney.
Bruce L. Woodbury is an attorney with the law firm of Jolley Urga Wirth Woodbury & Standish. The firm has offices in Boulder City and Las Vegas. To contact Bruce, call him at 293-3674 or 699-7500, or visit his website at www.juww.com.
P.O. Box 61901
Boulder City, Nevada 89006
Phone (702) 294-1392 Fax (702) 294-1392
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