If you are looking for ways to avoid probate court in Missouri, joint ownership is one way to go about it. Probate can be challenging, and a lot of people look for ways to avoid it. If you want to learn more about what probate is and ways to avoid it, keep reading.
What Is Probate?
Probate is the legal process that becomes necessary when a person dies, that person still has certain assets titled into their name, or there is no beneficiary designated on any such assets. When all of those are true, an asset becomes stuck in the name of the deceased, and the asset must be probated. This happens regardless of the deceased passing with or without a will. Even with a will, if assets are solely in the deceased’s name without beneficiaries, probate is still required. The will directs the distribution of those probate assets. If the deceased left no will, the assets will be distributed by the Probate Court.
How to Avoid Probate Court?
There are a few legal ways that people can keep assets out of probate. These ways include creating the following:
- A revocable/irrevocable trust
- Beneficiary deeds for real estate
- Transfer on Death designations for vehicles or financial accounts
- Payable on Death designations for bank or financial accounts
- Beneficiary bill of sale for tangible personal property
- Certain types of joint titling of property
All of these can help a person avoid probate court. Now we will go into detail on how joint ownership helps you avoid probate court.
How Joint Ownership Helps You Avoid Probate Court
Joint ownership is when two or more people share ownership of a property, asset, or business. In Missouri, there are two types of joint ownership: joint tenancy and tenancy by the entirety. Different types of ownership apply to different types of assets, and it depends on the different relationships of the owners. Joint ownership can be held by married couples, family members, business partners, or friends who all have a partial ownership of the property. However, each type of joint ownership is different.
Joint Tenancy is a way that property owners avoid probate. In order for a joint property or an asset is able to avoid probate in Missouri, it must include the right to survivorship. That means that if one of the owners is deceased, the property is passed to the other owner or owners without the need to go to probate court. Once you add someone as a joint tenant (other than a POD/TOD, which is revocable), you give them an immediate ownership interest. You cannot sell, mortgage, or otherwise dispose of the property without their consent. Also, adding someone as a joint tenant can constitute a taxable gift, depending on the value and relationship.
Tenancy by the entirety is typically used for married couples, and it applies to both properties and financial assets. Just like joint tenancy, if the asset is considered tenancy by the entirety, it passes on to the surviving spouse automatically. Tenancy by the entirety protects assets not only from probate but also from creditors who may try to claim part of the asset once the owner becomes deceased.
Pros and Cons of Co-Owning a Home
Pros:
- You have the opportunity to own.
- You have the right to enjoy your property to the fullest extent
- Deeded ownership and equity.
- Shared maintenance costs and responsibilities.
Cons:
- Personal challenges.
- Fewer financing options.
- Less freedom.
- Payment risk.
- Only passes down to the co-owners
There are pros and cons to everything, so it’s good to take note of what they are so you have a full understanding of whether joint ownership is the right move for you.
How to set up joint ownership
When starting your joint ownership, it’s best to be prepared with a written agreement that outlines the terms, structure, management, and financial and logistical aspects of the shared ownership. That way, everyone knows what’s going on. It’s good to note that when the last surviving joint owner dies, the asset will go through probate if they haven’t made other arrangements
Thinking About Joint Ownership in Missouri?
Joint ownership is one way to avoid probate court. If this is something that interests you, reach out to Mark Harford Law. They will be able to help you navigate the process and let you know what option is best for you.