JOINT TENANCY – NOT ALWAYS THE BEST SOLUTION

JOINT TENANCY – NOT ALWAYS THE BEST SOLUTION
by Roger V. McCaffrey-Boss
Copyright by Gay Chicago Magazine and Roger McCaffrey-Boss
July 2-8, 2009
http://www.gaychicagomagazine.com/advice/legallyspeaking.shtml


Janet and her lover Denise have found a condominium they would like to buy together. Denise wants to own the property in joint tenancy so that title to the condominium will pass to her if Janet should die. Janet, who has a much larger income than Denise, will be making the entire down payment but she feels uncomfortable in giving Denise one half of the equity in their new home.

Many LGBT couples take title to their homes as “joint tenants with right of survivorship” for the reason of ensuring that title to their home will pass to their surviving lover if one should die. When one joint tenant dies, the remaining joint tenant automatically owns the entire property without the necessity of a will or probate court proceedings. The couple is better protected because the property passes to the surviving owner outside of probate. Joint tenancy helps protect the couple’s primary asset even if the decedent’s family challenges the will. It is also a cheaper alternative than creating a trust to own the property.

It is a common misconception that joint tenancy is always the best answer for LGBT couples. The right of survivorship of joint tenant owners can be severed terminated by a joint tenant owner conveying his or her interest in the real estate to another person (called a “strawman”) who would then reconvey that interest back to the owner. If that happened, the couple would still own the real estate, but as tenants in common.

That means that upon the death of either owner (should they die without a will), their interest in the house transfers to their heirs. The survivor of the couple would only own one half of the house. Denise could end the joint tenancy without Janet’s consent. If Denise died first without a will, her family could force the condominium to be sold and Janet would have to move, losing one-half of the equity in her home after making the entire down payment.

Joint tenancy also doesn’t solve the financial problem of the LGBT couple with unequal incomes making unequal contributions for the down payment and who don’t split the monthly payments and expenses equally. Joint tenancy cannot reflect the couple’s financial agreement to own their home on anything other than a 50/50 basis.

The right of survivorship of joint tenant owners can be protected by using an Illinois land trust to hold legal title to the real estate. In this example, Janet would be the sole beneficiary of the land trust and have the trust agreement provide that upon Janet’s death her interest in the home would go to Denise. Until Janet died, Denise would have no interest in the home and could not transfer a part of it to anyone.

If Janet and Denise had contributed equally to the purchase of the condominium the trust agreement could be drafted to provide that Janet and Denise would own the beneficial interest of the land trust as joint tenants with right of survivorship and preclude in the trust agreement the other from making any assignment of the beneficial interest (transfer of ownership of the property) without the written consent of both beneficiaries – preserving the joint tenancy.

Also, when adding a partner’s name to title, however, renders it subject to that person’s creditors. The property will also be considered an asset for other purposes, such as qualifying for Medicaid or other public benefits. Since both parties own the property, both must agree on its sale. Jointly owning real estate is another excellent reason for the couple to discuss and execute a written domestic partnership agreement.

Roger McCaffrey-Boss is a graduate of Hamline University School of Law, St. Paul, Minnesota, and is a member of the Chicago Bar Association. You can e-mail him at RVMLAWYER@aol.com . He suggests that you consult your own lawyer for any specific questions regarding the issues raised in this column.
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