Joint ownership allows people to automatically pass home, securities and other property to their family because they are co-owners of those assets. But wills are still an essential part of estate planning because joint ownership does not cover all property and estate issues.
Individuals can jointly own property with their spouse, children, and other family members who have rights to survivorship. The co-owner who dies first loses all their ownership in the property and the surviving co-owner then obtains all ownership. This property may be passed on to heirs without any delay and expense associated with estate administration.
For example, married couples are often named as homeowners on the deed. If one spouse dies, the other spouse automatically assumes complete ownership of the home.
Joint ownership does not cover everything
It is difficult and impractical to place all your property in joint ownership. Overlooked items typically include jewelry, art collections and other collectibles.
If these items are not addressed in a will or there is no joint ownership, Colorado’s intestate laws would govern. These laws determine which heirs receive property when a person dies without a will or if the will is invalid. These laws are impersonal, and property may pass on to unintended heirs.
There are also times when both owners of joint property die simultaneously or in circumstances where it is difficult to determine who died first. The state’s intestacy laws would govern property distribution when this occurs.
There can be tax consequences when joint property passes to survivors. The IRS may hold an estate liable for additional taxes and penalties. Changes to the federal tax laws approved in 2007 give the IRS the power to collect taxes from transferees of property and broadly defines transferees.
A will also allows you to control how much and when property is inherited. This is helpful if there are younger or irresponsible heirs or any heir has special needs. Wills also address other matters such as guardians for underage children and instructions and funds for pet care.
An estate attorney can help you plan an estate that complies with your wishes. Lawyers can draft wills and prepare other estate documents that help meet your needs.