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Sharing a Home with Another Senior Friend Can be a Win-Win

Women with birthday cakeNJ 101.5 says in its recent post, “Buying a retirement home together,” that more seniors are looking into shared housing options for financial reasons—as well as for friendship and companionship. Many of these retirees have discovered that sharing expenses and experiences can improve their quality of life. Nonetheless, there’s a bit of estate planning that you’ll need to consider if you move ahead with this arrangement to make it a great experience.
There are two major issues: (i) what happens if you don’t want to live together, and (ii) what happens when one of you dies.
Titling the property is critical in eliminating potential problems in the future.
There are two ways to title the property— “Joint Tenants with Rights of Survivorship” or as “Tenants in Common.” With Joint Tenants with Rights of Survivorship (JTWROS), each party owns the property equally and undivided. Depending on state law, if one party wants to transfer his or her share to another person during his or her lifetime, the other owner has to consent and sign the resulting deed. After the death of one owner, rights of survivorship mean that owner’s share is transferred automatically to the surviving owner. These survivorship rights trump the deceased owner’s will or state inheritance laws.
Tenants in Common (T-I-C) is where owners own equal or unequal shares of the same property. Each owner has full control over his or her share. The one owner can transfer his or her share to another person at any time without the approval of other owners. If an owner dies, this individual’s share of the property can be passed along to a person named in his or her will.
If you choose T-I-C, it’s important that both owners have a current Last Will and Testament that designates how each share of the property is dealt with upon one owner’s death.
Doing some planning right now will avoid a possible headache in the future. You can enjoy your shared retirement home stress-free. Work with an estate planning attorney to be certain that you understand the issues and have the right estate planning documents created to meet your wishes.
Reference: NJ 101.5 (August 2, 2016) “Buying a retirement home together”

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Alternatives to Joint Tenancy

Bigstock-happy-couple-39712234When two people own property in common, they often title it in joint tenancy. This is especially true for married couples. However, there might be alternative ways to title the property that could be better for estate planning purposes.

Holding property as joint tenants with right of survivorship is very common. When two people hold title to property that way, if one of them passes away, then the property automatically becomes the sole property of the other joint tenant.

This has benefits for estate planning, as the property does not have to go through probate. However, there are potential drawbacks. If one of the owners is in debt, his or her creditors may be able to go after the property held jointly. If a parent holds property as a joint tenant with a child, it might make it so other children do not receive a fair inheritance.

Recently, Investor's Business Daily discussed alternatives to joint tenancy in "Best Ways To Title Your Assets — Avoid Traps," including:

  • Convenience Accounts – Sometimes an elderly parent will want a child to be able to pay the parent's bills. The temptation might be to add the child to a bank account as a co-owner. This is often a mistake. In some states convenience accounts allow the parent to remain as the sole owner of the account while adding the child as a person who can withdraw funds from the account and write checks.
  • Tenants in Common – Property can also be held as tenants in common. Unlike joint tenancy, each owner's share of the property is kept separate and does not automatically pass to the other owner upon death.

If you have questions about these or other alternatives to joint tenancy, consult with an estate planning attorney.

For more information about estate planning, please visit my estate planning website.

Reference: Investor's Business Daily (October 23, 2015) "Best Ways To Title Your Assets — Avoid Traps,"

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