When considering the creation of an estate plan, many Tennessee residents are drawn to joint ownership. This approach allows individuals to add the name of a desired heir to the title of certain assets during the original owner's lifetime. Many choose this approach in the belief that it is a simpler way to transfer assets upon death. In reality, however, joint ownership is often a poor choice for protecting your family.
Some spouses choose joint ownership with a spouse in order to simplify the transfer of wealth at the time of death. While it is true that the asset will immediately become the property of the joint owner when the other owner passes away, this is the end of any measure of control that the original owner has over the asset or how it is ultimately passed on. If the intent is for the surviving spouse to share the wealth with children or other family members, joint ownership offers no way to ensure that this outcome actually takes place.
Even more disconcerting is the fact that jointly held assets are subject to losses during divorce, financial strife or legal concerns. For example, if one's chosen heir goes through a divorce, he or she could end up losing half of the value of the asset during the property division process. This is usually not the intent of the original owner. It is important to note that the jointly owned property can be affected even before the original owner dies. This could lead to financial losses for both parties, even before the intended inheritance takes place.
When considering the best options for protecting your family and transferring wealth, a trust offers a better solution than joint ownership. A trust allows a Tennessee resident to dictate how and when the assets are distributed, and ensures that wealth passes on to the intended heirs. In addition, a trust can shield wealth from loss during divorce, legal judgments and financial turmoil. There are a number of different types of trusts, but a good fit can be found for any set of needs.
Source: recordonline.com, "Bonnie Kraham: Common elder law estate planning mistakes to avoid", Bonnie Kraham, July 1, 2015