Owning property jointly with another person is a very effective way to avoid the probate process. For example, if you own real estate with a family member as Joint Tenants with Rights of Survivorship, when one of you passes away, title to the property will automatically pass to the surviving owner – without the need for probate. The same is true for joint bank accounts. And, even though they’re not technically “joint” property, the same is true for life insurance policies, retirement accounts, and any other account that carries with it a beneficiary designation.
But, the very thing that makes this property great for avoiding probate, can also create potential problems for your loved ones.
Because joint property (and property with a beneficiary designation) is, by definition, non-probate property, it’s not controlled at all by the probate process. So, if you own a home or a bank account jointly with one person, and attempt to leave your share of that property to someone else in your will – your bequest just won’t work. The property will go to your co-owner and not to the beneficiary named in your will.
This can become a problem when you’re recently divorced, and it can be a problem when you simply change your mind about who you want your property to go to. It’s essential to know exactly how all your property is titled – and to let your estate planning attorney know, too. It’s also essential to remember that just making a change to your will might not be enough to really change your estate plan.
So, if you’re making a change to your estate plan, be sure to take a second look at your real estate deeds, your bank accounts, and your life insurance and retirement accounts!