For many, purchasing a home is the single most important investment you will make. During the purchasing process you will go to a title company office where an agent of the title company, usually called an escrow officer, will place a mountain of documents in front of you to sign. One of the documents will be a Warranty Deed. The Warranty Deed is the document that legally transfers full ownership of your property to you – the most important legal document in the mountain of documents put in front of you.

The Warranty Deed will have been prepared to transfer ownership to you and your wife or co-owner as joint tenants, with full rights of survivorship. Is this the appropriate way for you and your wife or co-owner to own your home? What are the legal ramifications of owning your home as joint tenants? Is there a better way to take title to your home? Does joint tenancy avoid probate? In Utah, buyers usually go through this important process without the aid of legal counsel. These questions go unanswered.

There is a better way to take title to your home. That better way is to establish a revocable living trust, whereby you designate yourselves as Trustees of your trust and also as Beneficiaries. But first, we will take a look at the pitfalls of signing a warranty deed that puts ownership of your new home into the name of you and your wife or co-owner as joint tenants.

Here are the pitfalls of signing a deed vesting ownership of your home in your wife’s and your name as joint tenants:

  1. When property is held jointly, you have the potential of incurring both federal and state gift tax. This is particularly a hazard when owning property jointly with non-spouses and non-citizen spouses.
  2. You have the possibility of double federal estate taxation. If you own the property with someone other than your spouse, the property will betaxed in the estate of the first joint owner to die. Then whatever the survivor receives will be included and taxed a second time in the survivor’ gross estate. If your spouse is not a US citizen, you will not get the unlimited marital deduction and a special trust, like a Qualified Domestic Trust, may need to be prepared.
  3. Once the first of you dies and the property becomes solely owned by the survivor, the last will of the first to die has no effect on the survivor’s use and disposition of the property. The property may be mismanaged or even given to person who you did not intend to benefit.
  4. The surviving spouse or co-owner can give it all away to a new paramour or swindler. Holding property jointly results in the total loss of control as to what happens to your property after you die.
  5. If one spouse or co-owner has financial issues when you take ownership of the property or develops financial issues later, your entire property is at risk. Creditors have the potential of taking all the property to pay off debt, judgments or other liabilities even if they are not your debts.
  6. While sole ownership of the home passes to the surviving spouse on your death, on the death of the survivor the home and all your property will have to be probated.
  7. The list is not exhaustive. There are many more pitfalls to joint tenancy ownership of property. While there may be some circumstances where ownership by joint tenancy may be appropriate, as a general rule it is not.
  8. How do you avoid these pitfalls? By creating a joint revocable living trust and titling your property in your trust.

A trust is a type of contract. It is a contract between you as the trust maker and the trustee, who, in most instances happens to be you also. You title or transfer your property to the trustee who then carries out the terms of the trust agreement. You dictate the terms of the trust agreement. Assets, like your home, titled in the name of the trust prior to your death do not become probate assets and are not subject to the probate court’s control and incumbent expense. You can plan for incapacity, and you can control the disposition of your assets including your home after your death so that your hard-earned estate will go to those whom you intend to