Is joint ownership a good alternative to an estate plan?
Joint ownership avoids probate, but it’s usually not a good alternative to a living trust-based estate plan. Adding a joint owner to your property exposes you to your joint owner’s law suits, creditors and possibly even divorce. Another downside is capital gains taxes. For example, if you had a joint-owner on your home and you pass away, the joint-owner will only gain a step-up in basis of half the value of your home. Alternatively, if you gift someone your home on your passing with a trust or a will, the recipient will have a full step-up in tax basis. You also cannot control what the joint owner does with your property upon your passing. They will have full control and be able decide how to distribute/spend the funds.
Joint-ownership may also not avoid probate; if both joint owners pass away and neither of you have a living trust-based estate plan, probate is likely to occur.
There is a better way! You can set up a living trust based estate plan. Get started today!