We previously wrote about how putting an asset into joint tenancy could result in loss of control over that asset. Another troublesome area for joint tenancy is that it often results in disputes and, frequently, litigation, after the person has passed away.
Take the classic situation of an elderly parent who adds one child on title to a property and a bank account. Without documentation of the parent’s intention, it is impossible to know whether the parent intended that:
- the joint tenant child would receive the property and bank account when the parent died; or
- the joint tenant child would divide up the property and bank account amongst the other estate beneficiaries.
Unless intentions are fully documented, disputes arise almost inevitably after the parent has died. The child who is joint tenant will feel that the property and bank account were indeed meant to go to him/her upon death, whereas the other beneficiaries will be convinced that they should share in those assets. These disputes can tear apart families and end up with tens of thousands of dollars spent by each side on legal fees – and an airing of the entire family’s dirty laundry before a judge.
The potential for litigation makes it absolutely imperative that the parent’s intention be documented in as clear a way as possible. It is also preferable to share the documented intentions with all the children prior to death, which gives the other children a chance to ask the parent about the arrangements and avoids the charge that the transfers were done secretively.
If a person is considering putting his or her asset into joint tenancy with another person, particularly if that other person is not a spouse, legal counsel should be involved to make sure that intentions are properly documented.