When working through an estate plan with an attorney, many decisions will be clear and easy to make. For example, you may know precisely who you want to receive your vehicle, your personal belongings, or your money. However, the most valuable thing most people own is their real estate property, which often leads to the desire of dividing the property equally among heirs for the sake of fairness. While many people in such a position will direct the property to be sold and the proceeds divided amongst heirs, you may prefer to keep the property in the family. Joint tenancy with survivorship is usually the first thought to make that happen.
What exactly is joint tenancy?
Joint tenancy, as your estate planning lawyer will explain, is the phrase given to property held jointly by more than one party. Joint tenancy with survivorship is a property that will be distributed jointly to surviving heirs upon the death of the owner. For example, if you have 12 acres of land and four children as heirs, the property will be automatically transferred to the four children upon your death. Each child would own an equal share of the property.
What happens if one of your heirs wants to sell their share?
Any situation that involves joint tenancy does allow for one of the "tenants" or owners to sell their share of the property. In some states, you are allowed to dictate how the property can be sold, but in some states, the decision would be solely up to the heir. For instance, you may have a stipulation that if one of the joint-heirs decides to sell their portion of the property, they must let one of the other heirs to buy their share first. Discuss the laws in your state with the estate planning attorney to determine the specifics.
Will there be inheritance tax on property granted through joint tenancy?
Real estate property can come along with an inheritance tax just as any other asset. However, laws can vary from state to state. For example, some states will require the heir to pay inheritance tax on the value of the portion of the property they have inherited. Using the four heirs as an example, if the property is worth $100,000, each heir would be responsible for the inheritance tax on the $25,000 worth of property they have inherited from you.
For more information, visit websites like https://www.linskylaw.com.