Why do many property owners favor joint tenancy?
They think the survivorship feature will save one or the other owner from probate expense, federal and state estate taxes by passing the property automatically to the survivor. While this is generally true as to probate expenses, it is not true as to federal and state estate taxes.

Is it a substitute for a will?
No. Joint tenancy only applies to a particular piece of property. A properly drawn Will covers all property owned. Joint tenancy may be the right thing for you today, but the wrong thing tomorrow. You cannot change it as easily as you can a Will to fit tomorrow's situation. Joint tenancy is difficult to change because a co-owner may refuse to cooperate. In addition, there may be adverse income tax and gift tax consequences.

Can a person compel his or her spouse to give back a joint title once it has been conferred?
No, not without court action and then only at the time of divorce or thereafter. The problem is even more difficult should either the husband or wife become incompetent.

How does a husband-wife joint tenancy affect their children?
Natural or adopted children have no interest in jointly-held property of the husband and wife as long as both are alive. After the death of the first joint tenant, the surviving joint tenant, while single, is free to dispose of the property as he or she sees fit. If the survivor remarries and places the new spouse's name on the property as a joint tenant, the children of the first marriage may not receive any interest in the property if their parent dies first.

What is the most common danger in joint tenancy?
One common to all such tenancies is that the joint owners, even husband and wife, may disagree. It then becomes difficult to make necessary decisions concerning management, repairs, sale, division of income from the property, public liability problems, insurance, and similar issues. Adding a person, other than your spouse, as a joint tenant may put your property at risk to the claims of that person's creditors, including the IRS. In addition, if the third party is married, the transfer of real property will likely require their spouse's signature.

What happens to husband-wife joint tenancy in case of divorce?
Joint tenancy ownership of property between husband and wife may be divided by the Court in any divorce proceeding the same as other property.

Is joint tenancy property subject to federal and state estate and taxes?
Yes. In fact, if the surviving tenant, other than a spouse, cannot prove the extent of contribution, the entire value of the jointly-held property may be subject to both federal and state estate taxes even though the deceased tenant may have purchased the property years ago. In the case of a surviving spouse, as a general rule, only one-half of the value of the property is included in the estate of the deceased spouse.

Does joint tenancy ever involve gift taxes?
Yes. Depending upon the value of the gifts and the recipient, a gift tax return may be due. The return and the tax are due April 15th of the year following the gift. Some portion of the property may also be subject to an estate tax if the donor remains a joint tenant.

Does joint tenancy reduce income taxes?
In most cases it will not. Income will be taxed to each co-owner and, upon disposition, gain or loss will be shared in proportion to interest owned. If husband and wife file separate returns, the holding of income property in joint tenancy may result in additional tax.

Does joint tenancy save probate expense?
Property held in joint tenancy does not have to be probated at the death of a joint tenant. However, there may be expense in perfecting the record title to property after the death of each joint owner regardless of other probate expenses. In addition, the estate of the last surviving joint owner will have to be probated as opposed, for instance, to property held in a trust.

If joint owners die simultaneously (as in an accident), what happens to their joint tenancy property?
Probate proceedings will be required to transfer title to the joint tenancy property. In some instances, separate probate proceedings for each tenant may be necessary.

Is joint tenancy ever advisable?
Joint tenancy may be appropriate between spouses. However, a joint tenancy with a non-spouse third party, even a child, should be weighed carefully and discussed with your lawyer.