Incapacity planning is a critical part of estate planning for Pennsylvania residents because it allows you to make arrangements for what will happen to your property and assets if you become unable to make decisions for yourself. Joint tenancy is one option that you may consider when planning for incapacity, but it is important to understand the pros and cons of this approach before making any decisions.
Joint tenancy in Pennsylvania
Joint tenancy is a type of ownership that allows two or more people to hold title to property together. Each co-tenant will have an undivided interest in the entire property and is equally entitled to its use and enjoyment. They also have the right of survivorship, which provides that if one tenant dies, the other tenant(s) will automatically inherit their interest in the property.
You can create two types of joint tenancy in Pennsylvania: joint tenancy with right of survivorship (JTWROS) and tenancies by the entirety (TBE). JTWROS can be created between any two people who own property together, regardless of their relationship. TBE, on the other hand, can only be made between spouses.
Deciding if it is the right fit
This estate planning option might be a good fit if your goal is to help your beneficiaries avoid the costly and time-consuming probate process. This is because the property held in joint tenancy automatically transfers to the surviving tenant upon your death.
It could also protect your loved one from creditors after you pass. As mentioned, ownership automatically transfers to the surviving tenant, so your creditors can’t claim something that’s no longer yours.
Despite that, joint tenancies are not perfect; they could also be a bad estate planning option. For example, if you only named one person as a co-owner of your investment accounts, they will receive everything. Therefore, your other heirs won’t have the ability to claim that part of your estate even if you say so in your other estate planning documents like a will. Also, if your co-owner has debts, their creditors can come for the assets in your joint tenancy.
There are hundreds of different estate planning tools to use in Pennsylvania. If a joint tenancy doesn’t seem like a good option, you could explore them. But if it checks all your boxes in regards to your incapacity planning goals, they may be worth considering.
