Many Ohio residents are interested in ways to simplify their estate plans and to pass along assets to loved ones outside of probate. Often, adding a child or other relative as a joint owner of an asset seems like a good way to accomplish that goal. While joint ownership does have some advantages, there are a number of ways that this approach can lead to estate planning trouble.
When an individual passes away, property that is jointly owned immediately becomes fully owned by any surviving joint owners. This means that a child would have access to a jointly owned piece of real estate immediately, and he or she could make decisions concerning whether to keep, sell, improve or borrow against that piece of property. There would be no need to wait until the estate is settled through probate.
On the other hand, joint ownership also means that the child would have a partial claim on the property prior to the other owner's death. This means that any financial obligations placed on the child could have an impact on the other owner. For example, an adult child who goes through a divorce could lose his or her share of a piece of jointly owned real estate as part of divorce negotiations. Such a scenario could leave a parent in a position of having to work with a child's former spouse to determine the future of the property.
For most Ohio residents, there are better estate planning devices than simply adding loved ones to assets as joint owners. Trusts are one example, and they can be important tools in protecting assets that will eventually be handed down. As so many people know, it is impossible to predict the future, and even the best laid plans sometimes fail to come to fruition. Joint ownership comes with a great deal of risk, and not every family is well-suited to take on those risks.
Source: yumasun.com, "Estate planning: Adding children on titled assets a bad idea", Shawn Garner, March 7, 2016