Owning Real Estate As Joint Tenants Can Be Risky Or Costly!
We have clients who ask us to transfer real estate to a child or children during their life-time in order to avoid probate and for other family reasons. This can cause undesirable tax results (capital gains) when the property is sold by the child or children in the future. Further, a joint tenant can sever the joint tenancy without notifying the other joint tenants which converts the nature of the tenancy to a “tenancy-in-common.”
The most famous decision illustrating this result is a 1980 California decision where a wife conveyed her joint interest to herself as a tenant in common before her death. Upon her death, her husband expected to own the property outright but owned it with his wife’s devisees under her will! While Rhode Island uses a different form of joint holding by a husband and wife called a “Tenancy By the Entirety”, if another person is added as a joint owner, unexpected results can occur.
The moral: “CounselFirst”!