Joint Asset Ownership and Estate Planning

Joint Asset Ownership and Estate Planning

Have you considered how your assets will pass to your loved ones once you die? You can limit the taxes and fees paid to the government and maximize the amount of assets flowing to your loved ones with carefully considered estate planning. It is important to consult a financial advisor and a legal professional to discuss your particular circumstances, as there are benefits and drawbacks to many estate planning measures.

Once you pass on, all assets that form your estate are subject to probate fees. The probate fee is calculated on a percentage of the value of your assets, which can be significant when you consider the value of real estate and investments these days. The probate fee is paid out of the estate funds and directly reduces the amount available to your beneficiaries.

An estate planning measure that is often discussed is joint ownership of assets that would otherwise form part of your estate. A jointly held asset is one where each joint owner is deemed to hold 100% of the asset with a right of survivorship, meaning upon the death of one owner the property is simply transferred directly to the surviving joint owner, bypassing the estate and therefore, not subject to probate. Similarly, investments for which you hold jointly or have named a specific beneficiary will flow directly to that person and will not form part of your estate.

Common assets that are jointly owned are real property and bank accounts. Another benefit of joint ownership is that the surviving owner has access to the asset immediately as it is not held up in the estate administration process. This is particularly important for spouses who will be responsible for the continued care of the family after the death of the other spouse.

It is important to keep in mind that there are consequences to holding assets jointly and naming investment fund joint owners or beneficiaries which must be considered when making estate planning decisions. A jointly held asset is subject to tax implications if sold or transferred prior to your death and may be subject to attachment proceedings if one of the joint owners has legal difficulties. Also, in the wrong hands, jointly held assets may result in disputes and misuse. Further, your estate is responsible for any taxes payable when investment funds are transferred after your death, which will affect the amount available for other beneficiaries through the estate assets.

If the asset is held jointly simply to put it in the hands of one beneficiary to distribute to the remaining beneficiaries, it can be deemed a resulting trust and subject to Probate fees in any event. It is important to draft accompanying documents which illustrate your intentions with respect to those jointly held assets.

Careful estate planning has many benefits, but only if all of the relevant circumstances are properly considered. You must weigh the consequences against the savings to ensure that your final wishes are given full effect and that no unforeseen problems with your assets arise in the meantime. Be sure to consult your financial and legal advisors for the most advantageous estate planning advice.

A lawyer can help you to understand the wide range of issues that arise with estate planning matters. If you would like advice or for more information regarding such matters please contact Chahal Priddle LLP at 250-372-3233 to set up an appointment today.