Many people want to avoid probate because the process is long, expensive, and public. One method to avoid the probate process for real property, brokerage accounts, and bank accounts is to title those Michigan assets as a joint tenancy with the right of survivorship by including your intended heir as a co-owner. Using a joint tenancy with the right of survivorship to avoid probate has both pros and cons.
Pros of joint tenancy with the right of survivorship to avoid probate
When you retitle your home, bank account, or investment account in both your name and that of your intended heir, the property will pass directly to the co-tenant without having to go through probate. Three advantages of using a joint tenancy with the right of survivorship to avoid probate in estate planning include the following:
• Property immediately transferred upon death without needing to go through the court
• Simple to set up by retitling the property
• Inexpensive to create
• Equal rights and responsibilities among the joint tenants
Cons of joint tenancy with the right of survivorship to avoid probate
While there are some benefits of creating a joint tenancy with the right of survivorship, you should also consider the following disadvantages:
• A joint tenant’s creditors could come after the jointly-owned property
• To sell the property, all of the tenants must agree
• Joint tenancy with the right of survivorship can’t be changed once created
• Doesn’t avoid probate for the surviving joint tenant
While a joint tenancy with the right of survivorship can be used to avoid probate, there are also other options that can be used to do so without the risks mentioned above. For example, creating a trust and transferring ownership of the real property, bank account, or investment account to the trust and naming the intended heirs as trust beneficiaries can also avoid probate while protecting your property against the reach of your intended beneficiaries’ creditors.