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If
you own property with another person as joint tenants with right of
survivorship, that is, not as tenants in common, the property will
pass directly to the remaining joint tenant upon your death and will
not be a part of your probate estate. (It will, however, be a part
of your taxable estate.) Frequently, people (particularly in old
age) will cause bank accounts or securities to be placed in the name
of the owner with one or more children or trusted friends as joint
tenants with right of survivorship. This is sometimes done as a
matter of convenience to give the joint tenant continuing access to
accounts to pay bills.
It is
important to realize that the ownership of property in this fashion
often leads to unexpected or unwanted results. Disputes, including
litigation, are common between the estate of the original owner and
the surviving joint tenant as to whether the survivor's name was
added as a matter of convenience and/or management or whether a gift
was intended. The planning built into a well-drawn will may be
partially or completely thwarted by an inadvertently created joint
tenancy that passes property to a beneficiary by operation of law,
rather than under the terms of the will.
Many of these problems are also applicable to institutional
revocable trusts and "pay on death" forms of ownership of bank,
broker, and mutual fund accounts and savings bonds. Effective
planning requires knowledge of the consequences of each property
interest and technique.
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