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Warner Angle Hallam Jackson & Formanek PLC


Estate Planning

The Problems with Joint Tenancy Ownership

In most cases, parents should not enter into joint tenancy ownership with their children. If you want to avoid probate, you can designate your children as the beneficiaries upon your death.

Traditionally, joint tenancy ownership of real estate and bank (or other) accounts has been considered a fairly simple method of transferring assets upon death. That's true ... if everything works out okay.

See related article: When Joint Tenancy Ownership Isn't Enough

Problem One

Let's consider a fairly common scenario. Mom has three children, a house and bank accounts. She puts her son's names on the house and each of the bank accounts. Sonny, of course, is a good citizen; he knows the law requires him to have auto insurance, and he dutifully has the state-required minimum, $50,000.

One Friday evening, Sonny stops in at the bar on the way home. One drink leads to another, which leads to another. Before long, Sonny says his goodbyes and climbs behind the wheel of his car to go home and has an accident, permanently incapacitating a child.

The child's parents sue Sonny. His insurance company defends the lawsuit, but, ultimately, the plaintiff is able to get a judgment far in excess of Sonny's insurance coverage.

Plaintiff's attorney starts looking for assets and finds that Sonny is a part-owner of a residence and several bank accounts. Thinking that he's hit the gold mine, Plaintiff's attorney starts proceedings to seize the bank accounts and the house to pay for the judgment.

Can't happen? It does happen. Ultimately, Mom will most likely be successful in defending the plaintiff's claims because Arizona law provides that joint tenancy property is owned by the owners in the percentage of the joint tenant's contribution to the asset. However, vindication may come only after Mom hires an attorney to defend her and incurs a $20,000 (or higher) legal bill.

Problem Two

Sonny turns out to be a good driver and skips the bar on the way home. Mom puts Sonny's name on the joint tenancy accounts and then dies. She's probably thinking that Sonny is going to split the assets with his siblings. But, by law, Sonny doesn't have to split with anyone! He is the surviving joint tenant entitled to the account on Mom's death. The other siblings might be able to prove Mom's intent, but only after taking Sonny to court.


The lesson to be learned from these two examples is that parents should not enter into joint tenancy ownership with their children. If Mom is worried about having to go through probate, she can designate the children as the beneficiaries upon her death. This is done by using a “beneficiary deed” for real property and by designating the children as beneficiaries of accounts (i.e., “payable on death” designees).


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