PITFALLS USING JOINT TENANCY, ESPECIALLY IN CALIFORNIA

Adding someone on as a Joint Tenant can expose your property (including bank accounts, stock brokerage accounts, and real estate). The IRS has successfully filed liens and collected against "newer" joint tenant. The IRS collected from a son's interest even though the mother only wanted to avoid probate. The IRS said that joint tenancy for probate simplification is still ownership for collection purposes.

Yet, joint tenancy doesn't remove property from being counted in your "estate" for estate tax purposes.

Real estate doesn't enjoy full step up in basis on death of spouse, as results with "community property" ownership.

Joint tenancy overrides any and all designations in a will!

California has a new way for married couples to hold title: "Community property with rights of survivorship." This provides stepped up basis, yet can avoid probate.

You should consult an expert about estate planning, especially with recent increases in the value of your residence or other real estate. Most people need to have a trust drawn for them by an attorney specializing in Estate Planning. I have had excellent results with Estate & Gift Tax Attorney Stephen M Magro 714-832-8456. (We are in the same building - on the ground floor).

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Material Copyright © 2003 James E Reynolds CPA