San Diego Estate Planning Lawyer Blog
One way to avoid probate with respect to real property is to create a joint tenancy. While it may seem simple, this is typically not the best form of estate planning. There can be may unintended consequences for adding someone to the title such as the inherant issues with co-ownership and unintended tax consequences. Any form of estate planning, including adding someone to a deed, should only be done after consulting with an estate planning attorney.
Joint Tenancy basically means you co-own the property with another person and each of you have survivorship rights. So if you and your spouse co-own a house as joint tenants, upon your death your interest in the property automatically passes to your spouse (or vice versa). The property will not pass through probate under your will.
The other way to co-own property with other persons is as tenants in common. In this form, each person separately holds their interest in the real property and nobody has survivorship rights. Say, for example, you and your brother buy a piece of commercial real estate as tenants in common. You each own 50% of the property, and upon your death your 50% would pass according to the terms of your will. Your brother would have no survivorship rights.
Daughter Mounts Belated Challenge to Father’s Estate Planning
You can change a tenancy in common to a joint tenancy. Again, the main reason to do this is to keep the property out of probate. If you make such a change in haste, there may be objections from family members, which in turn can lead to litigation. A recent California case illustrates one such scenario.
In this case, a man co-owned a piece of real property in Chula Vista with his sister as tenants in common. In March 1999, the man was admitted to the intensive care unit of a local hospital. A week later, while still hospitalized, he signed a new deed for the Chula Vista property changing the ownership to a joint tenancy. When the man died shortly thereafter, the sister thus automatically received her brother’s one-half interest in the property.
Many years later, the deceased man’s daughter attempted a probate estate for her father. The daughter alleged her father lacked sufficient mental capacity to execute the joint tenancy deed, thereby invalidating it. If true, this would mean the tenancy in common stood at the time of his death, and his one-half of the property would pass to his heirs under California intestacy law (as the deceased did not leave a will).
The probate court ultimately rejected the daughter’s petition. She appealed, but the California Court of Appeal saw no reason to disagree with the probate judge. On appeal, the daughter tried to introduce new evidence in the form of her father’s medical records, which she said proved he lacked the capacity to communicate his intentions with respect to the property. Although the appeals court said this new evidence was not admissible, it nonetheless reviewed the medical records and noted they did not prove diminished mental capacity. The court explained, “While it is undeniable that [the deceased] was physically infirm at the time of his death, a determination that he lacked the legal capacity to execute the deed is to be based on deficits in his mental functioning rather than on his physical condition.”
Need Help with Estate Planning?
Of course, it is never advisable to leave important estate planning decisions until you are literally on your deathbed. That is why you should consult with an experienced San Diego estate planning attorney if you have questions or concerns about the disposition of your property. Contact the Law Office of Scott C. Soady if you would like to speak with someone right away.