Pitfalls of Joint Estate Planning
Risks of Joint Estate Planning
Although there are many positive aspects to joint estate planning, there are also some things to be aware of. Holding assets with a spouse or common-law partner is very common. Generally, joint ownership is not a problem because the individuals work together to finance the asset and contribute jointly to the asset afterwards. Similarly, the benefits of joint ownership for spouses are clear – the joint owner enjoys the right of survivorship when the other owner dies. That is, the person surviving becomes the sole owner. However, issues can arise where joint owners are not spouses, but are family members or friends. In such situations of joint ownership, the arrangement between the parties must be very clear in order to avoid potential future problems, disputes, or litigation.
If you are considering joint ownership of a property or other asset, it is important to obtain legal advice from an estates lawyer with specialized knowledge in this area. At Sweatman Law Firm we help clients understand the potential legal implications of such an arrangement and guide them on managing their risk accordingly.
Common Scenarios of Joint Ownership
With rapidly escalating real estate prices, joint property ownership between children and parents, between grandchildren and grandparents, or between family members or friends is becoming very common.
It is also common for bank accounts or other financial assets to be jointly owned between parents and children. This is often done to minimize probate or to help an older or widowed parent manage their finances.
While such arrangements may be entered into with good intentions, problems and issues can rapidly arise. For instance, these agreements can become fertile ground for potential elder abuse. In other cases, these arrangements can cause tension between family members who may have believed that one child was holding an asset in trust for all other children, while that child believes something completely different. Any such misunderstanding or dispute can lead to expensive, prolonged litigation that may completely negate the initial financial benefits that motivated the arrangement in the first place or defeat any estate plan that was in place.
Potential Risks of Joint Ownership
Other than prolonged and expensive litigation, other common risks of joint ownership may include:
- Frozen assets (often for the duration of the dispute or litigation);
- Emotional impact on a family
- Health impact on the person whose assets are at issue.
Contact Our Specialized Trusts Lawyers for Guidance on How to Protect Yourself in a Joint Ownership Arrangement
Understanding the potential pitfalls and legal risks of joint ownership is important before entering into such an arrangement. Speaking with a knowledgeable and strategic estates lawyer can help you protect yourself in the long run. To obtain legal guidance about the options available to you, contact Sweatman Law Firm online or at 905-337-3307 to arrange an appointment. For your convenience, we have offices located in Oakville, Milton and Georgetown.