One of the problems with joint tenancy ownership is that while the registered title might reflect joint ownership, the true beneficial owner might be one of the registered owners are in fact another unregistered owner in trust– as such, watch out for phony joint tenancies.
For many years estate planners have advised their clients to transfer their assets into joint tenancy ownership with loved ones so they may inherit by right of survivorship and avoid paying legal and probate fees.
The rationale has been that the surviving joint owner, by right of survivorship automatically becomes sole owner of the entire property including the deceased’s share. Thus the asset does not fall into the deceased’s estate but instead passes to the surviving joint owner. As a result, legal costs and probate fees are avoided.
The thinking has been: No muss, no fuss and, what is more, no delays!
Better yet- no lawyers. (Wrong)
Indeed for many years, joint tenancy arrangements have been used by families and very close friends. Most often they are used for home ownership or for financial assets such as bank accounts and investment accounts. Indeed, other than a will, this type of arrangement is probably the commonest form of estate planning.
It is very important to understand, however, that such ownership can lead to hotly contested legal disputes. This is particularly the case where only one of the joint owners has contributed most or all of the funds to the investment account or to the purchase of the property.
Fortunately such disputes rarely arise in cases where both of the joint owners have made substantial contributions to the acquisition of the assets –for example in the case of joint ownership by spouses who have been long married.
A relatively common fact pattern, however, involves an elderly parent, let us suppose a mother, who transfers her home into joint tenancy with only one of her children. She may well think that she is being prudent in avoiding the payment of probate fees upon her death and believe that the one “favoured” child will do the right thing and share the home with the other siblings.
By the time this mother dies, however, the favoured child has convinced himself or herself that the other siblings have no claim to the home because mother intended to leave it for him or her alone- after all, “mom always loved him best”.
The legal remedy is called Resulting Trusts and there are several blogs about iit on this website.