A few problems to consider with joint ownership

Whether to own property jointly or separately continues to draw letters from readers. The question of joint ownership is far too lengthy to be dealt with in detail in these columns. Further, states have differing laws relating to the joint ownership of real estate and other property which could change the situation for those states' residents. With these thoughts in mind, the following may be of general interest:

Often, joint ownership is considered a substitute for a will. Joint ownership with right of survival calls for the immediate transfer of ownership rights to a surviving joint owner when one passes on. If more than two joint owners are involved, then all of the survivors own the property when one owner passes on. This supposedly clear relationship is subject to other problems if both persons die in a common accident under conditions that make it impossible to determine who died first.

Joint ownership also creates problems where one person might desire to sell and give or will his or her share to someone other than the joint owner. A joint ownership cannot ordinarily be disposed of without dissolving the joint ownership or by getting permission of the other joint owner(s).

Generally, "Moneywise" has recommended against joint ownership except between spouses married for the first time. Other methods of providing perceived benefits appear better suited than joint ownership.

One common case is the older person, widowed or divorced, who places a house or a checking account in joint ownership with a daughter or son. Objectives may be to avoid probate and expedite the transfer of property directly to the younger person. While this is possible and relatively common, it creates considerable risk. If the son or daughter should be involved in an accident or other legal action and a judgment is rendered against the younger person, the opposing litigant could claim all of the jointly owned property in a settlement. even though the parent placed all of the funds in a jointly owned account, the claim against the son or daughter could take the full amount. S similar claim could take an oldster's house or jointly owned property.

Instead of allowing a son or daughter joint ownership of a checking account with the aim of permitting the younger person to pay bills or provide for care in case of a parent's incompetence, a power of attorney could suffice. The power of attorney could authorize a bank to pay checks written by the younger person for the benefit of the oldster without conferring joint ownershp. Other problems of a son or daughter owning property jointly with a single parent or two parents may arise in a divorce. Jointly owned property is considered to be wholly owned by both joint owners. There is no 50-50 split. If more than two joint owners are involved, each of the three or more owners can claim 100 percent of the property. Thus, an attorney for the divorced spouse of the joint owner could claim that all property jointly owned by the other with one or two parents is subject to a property settlement.

Similar problems may arise from a previously divorced spouse or children of a former marriage when property is jointly owned by spouses not married for the first time.

This brief treatment of a few of the problems of joint ownership should persuade you to seek legal counsel before changing property of any kind into joint ownership.