The Hidden Perils of Joint Ownership - Part Two

Problem No. 2 – Needs-Based Benefits Eligibility

Putting a child on the deed to a home (as a joint tenant) may result in a non-exempt transfer of a resource. Non-exempt transfers may result in a penalty period being tacked on for determining eligibility for Medicaid. Bottom line, these rules are very complicated and should be discussed with an Estate Planning attorney who is well-versed in planning for needs-based benefits such as Medicaid, and SSI.

Problem No. 3 – Undermining the Estate Plan

Many people think of probate avoidance when they think of holding property jointly, but many forget that the joint holder will not have to abide by the terms of the rest of their Estate Plan when it comes to distributions. Jointly held property (with rights of survivorship) passes directly to the joint owner, and is not subject to the terms regarding distributions in the Will or Trust of the deceased owner. This can result in unintentional disinheritance of other children/loved ones.

The immediate assumption by some of my clients is that the child on the account or deed can just give the other children a portion after the parent dies (although this may not necessarily be a realistic outcome). Aside from the practical drawbacks of this kind of assumption-based planning, there may be unintended gift tax consequences imposed on the donor child in such a scenario.

As you can see, holding property jointly can produce some unfortunate consequences. That being stated, holding property jointly can also be a useful planning tool in the context of your entire Estate Plan. If you would like to explore this topic further, please give us a call at (203) 651-5521 or use our online contact form HERE.