Joint Property Ownership Pitfalls

Joint ownership may sound like a simple way to avoid probate, but it can actually create very complex and stressful estate problems. We want to help you avoid those problems so today we are exploring what joint property ownership can mean in the context of an estate plan.

Why People add a Joint Tenant to a House Deed

Most of the time, people choose to add a joint tenant to their house deed because they want that loved one to avoid the hassle of probate should something happen to them. The goal is that the loved one added to the deed will take over ownership of the property and remain in the home without delay or issue—even after they die.

Different Types of Joint Ownership

There are different ways to own property in the state of Georgia. And it is absolutely essential to understand and ensure your deed is set up properly from the beginning.

Joint Tenancy with Rights of Survivorship

This type of property ownership is utilized when two people own a property together and they wish for their interest in the property to pass directly to their co-owner upon their death. This is a common way to title property jointly owned between a married couple. Each partner has equal ownership rights and should one die, the other automatically becomes the sole owner.

Tenants in Common

Tenants In Common is the default property ownership law in the state of Georgia. This means if your deed does not state that the property is owned as joint tenants with the right of survivorship, the state will view your deed as a tenants in common deed. So what is tenants in common? It’s when you own the property jointly with someone, but each co-owner holds their own interest in the property. So, if you die, your interest in the property transfers to your heirs as per your estate plan or intestate laws.

Ladybird Deed

In July 2024, Georgia lawmakers updated the law to allow for what is commonly referred to as a Ladybird Deed, or a transfer on death deed. The Ladybird Deed allows real estate to pass from the decedent directly to the person named in the deed, but that person doesn’t own any share of the property during the lifetime of the property owner. Because the law is relatively new, there are quite a few questions about how it will work in real life situations.

Common Pitfalls of Joint Property Ownership

• Unintended tax consequences – if you own property with someone you don’t file jointly with, your taxes may become much more complicated.

• Exposure to debts/liabilities – if you jointly own property with someone who is irresponsible or unable to make the payments, you are on the hook to make sure any mortgages or taxes are paid on the property.

• Loss of asset control – if you owned the property outright, but you add a co-owner to the deed so that it avoids probate, you now may be subject to their signoff to do anything with the property—including selling it.

• Accidental disinheritance – if your property is your largest asset and you have co-ownership of said property with one person, when you die the entirety of that property could pass to your co-owner—leaving the rest of your heirs with little or no inheritance.

Impact of joint property ownership on estate plan

The deed of your property determines how it will be handled after your death. If you have a deed where you are the sole owner of the property, then that property will be handled as your Will states. If you don’t have a Will, it will follow the intestate laws and be distributed to your heirs as the state deems is lawful. If you own the property as tenants in common with another person, your interest in the property will pass as if it were owned solely by you as I stated above. And if you owned the property as joint tenants with rights of survivorship, or with a Ladybird Deed, then the property will automatically transfer to your co-owner/person named on the deed who survived you. 

This means that the property falls outside your estate. It will not be distributed per the rules of your Trust or Will. Sometimes this is exactly what you want to happen, but other times it is not and can create the problems listed above. It can also create discord among your loved ones when things are confusing or appear to be unfair.

When Joint Ownership Might Make Sense

Joint ownership can make sense and be the right choice for you. Joint ownership is often the right choice when the property is owned by spouses in a committed marriage. There may be other circumstances where joint ownership is the right call when the property owners are not married to each other. But whether you are married or not, before you decide to jointly deed any property you should speak to a skilled estate planning professional to ensure your goals and needs are met. 

Alternatives to Joint Ownership

Many people choose to make their Trust the owner of their property. A Trust is a better alternative to joint property ownership. A Trust actually gives you much more control over the property and ensures there are safeguards in place to protect your loved ones long after you are gone. In most cases, you would be the Trustee of your Trust– which means you retain control over your property during your lifetime. You can make upgrades to the property or even sell it, because it is your right as the Trustee to do so. This is why so many people choose to utilize a Trust rather than joint property ownership.

And if you are married and own in property jointly with your spouse already, you can still create a Trust together, called a joint trust, to put those safeguards in place!

GA Specific Considerations

Keep in mind that every state handles property and probate differently. While Georgia does have joint tenancy with right of survivorship, tenants in common, and Ladybird Deed property ownership, other states have different laws as it comes to property ownership. This means that the real estate you own in Georgia will fall under the Georgia property ownership laws, while properties owned in other states and countries will be governed by their laws of the land. This is why working with skilled estate planning (and real estate) attorneys, as well as financial planners, is so important. You worked hard to acquire your property, let’s make sure it does what you intend it to.

Conclusion

The best ownership structure for you depends on your goals, your estate, and your family structure. Together we can create a plan that helps you achieve those goals while leaving a legacy. Call us at (404) 736-6066 or visit our website to schedule a consultation about how we can help you pass your property on to future generations!

FAQs

Is jointly owned property part of an estate?

That depends on how the property is held and how the deed reads. This is why it’s so important to work with an estate planning attorney before making any changes to property ownership.

Joint Ownership vs. Trust in Georgia?

Both can be beneficial. Both can accomplish the same thing. And both can get you into trouble if you DIY it. Give me a call and let’s talk about your specific situation. I’d love to help you decide which is best—and who knows? Maybe you need both!

What are some of the problems with joint tenancy in Georgia?

Depending on the way your deed is written you can lose control of your real estate, you can mistakenly disinherit a spouse or child, or you can pass along real estate to someone you actually don’t want to. Using a Trust can bypass a lot of these issues.

BONUS: Download my Peace of Mind Through Estate Planning ebook