That is correct, as far as it goes. The problem is: what happens when the second person dies? If the house and the bank account are not held in a trust, then when the second owner dies, $900,000 is subject to probate.
And before you ask - it's usually a very bad idea to add a non-spouse (or non-domestic partner) as a joint tenant ... if that other person has any debtor/creditor problems, for example, then the creditor can seize the account or in some cases even force the sale of the house. Plus, adding someone's name to the deed or adding their name to a bank account is a gift for federal gift tax purposes - and that can be costly, too.
Why not just create a trust and not have to worry about all of those issues? Besides saving money in the long run, a trust also provides a way to handle the property if you become incapacitated (the person or bank you've named as successor trustee can step in and start managing your assets for you without having to have someone appointed as your "conservator".
I suggest you talk to a competent estate planning lawyer about your options.
The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.
Ms Brewer offers sound advice. Do not do your own estate planning without experienced counsel. If Ms. Brewer is near you, then give her a call. Estate planning is very technical especially in community property states like CA. For more on these and other issues, see Estate Planning Mistakes: 5 Not So Easy Pieces at http://www.sjfpc.com/estate_planning_drafting_wills_trusts.html
Hope this helps.
Please remember to designate a best answer to your question.
Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia and Montgomery Counties. He is authorized to handle IRS matters throughout the United States. His phone number is 215-735-2336 or his email address is email@example.com , his website for more tax, estate and business articles is www.sjfpc.com. and his blog is
LEGAL DISCLAIMER Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia and Montgomery Counties. He is authorized to handle IRS matters throughout the United States. His phone number is 215-735-2336 or his email address is firstname.lastname@example.org , his website is www.sjfpc.com. and his blog is <http://frommtaxes.wordpress.com/> Mr. Fromm is ethically required to state that the response herein is not legal advice and does not create an attorney/ client relationship. Also, there are no recognized legal specialties under Pennsylvania law. Any references to a trust, estate or tax lawyer refer only to the fact that Mr. Fromm limits his practice to these areas of the law. These responses are only in the form of legal education and are intended to only provide general information about the matter within the question. Oftentimes the question does not include significant and important facts and timelines that if known could significantly change the reply or make such reply unsuitable. Mr. Fromm strongly advises the questioner to confer with an attorney in their state in order to ensure proper advice is received. By using this site you understand and agree that there is no attorney client relationship or confidentiality between you and the attorney responding. This site should not be used as a substitute for competent legal advice from a licensed attorney that practices in the subject area in your jurisdiction, who is familiar with your specific facts and all of the circumstances and with whom you have an attorney client relationship. The law changes frequently and varies from jurisdiction to jurisdiction. The information and materials provided are general in nature, and may not apply to a specific factual or legal circumstance described in the question or omitted from the question. Circular 230 Disclaimer - Any information in this comment may not be used to eliminate or reduce penalties by the IRS or any other governmental agency.
The probate fees in California will be based upon the gross value of all assets that do not pass automatically by contract or by operation of law. So, anything held within a revocable living trust avoids probate. Retirement plans and life insurance policies (as long as there is a valid beneficiary designation) avoid probate. Assets held in joint tenancy or community property with right of survivorship avoid probate, passing automatically to the survivor. And, accounts held in joint name, or with pay-on-death instructions avoid probate. Otherwise, the fees paid to the executor and to the attorney for the executor administering the probate estate are based upon the gross (not net) value of the probate assets, and in the case of a $1 million gross estate, both the executor and attorney will be each be entitled to $23,000.
The best way for a married couple to avoid probate after the first death (and after then second death), and also have a contingency plan in place to avoid court-supervised conservatorships in the event of incapacity, is to have an integrated estate plan prepared, including a revocable living trust, one that provides for how the assets are to be used for the couple's benefit will alive (even if incapacitated), what is to happen after the first death, and what is to happen after the surviving spouse's death. All without probate or court supervision.
You should consult with an experienced trusts and estates attorney near you.
This general response is not intended to create an attorney-client relationship.
I agree with the attorneys above. Owning property as joint tenants may help you avoid probate upon the passing of one owner but when the second owner passes, the full property will need to pass through probate. Ultimately, once the the surviving joint tenant passes, the assets in his estate will be subject to probate.
As a probate and estate planning attorney in Irvine, I have seen simple estates go through probate because of ineffective planning and it's just not worth it timewise. The minimum amount of time it would take to finalize a probate is 6 months, often taking much longer. There are also a lot of fees incurred.
For a probate estate valued at $900,000, the maximum probate attorney's fees alone is $14,000. In addition to that, the estate will have to cover fees for the inventory and appraisal of the assets, any required bonds and court filing fees. The cost of creating an effective estate plan with a professional is within the range of court filing fees alone. Also important to note is that in valuing the probate estate, debts are not considered. For example, if your home is worth $500,000 and you still have a $200,000 mortgage, the home will still be valued at $500,000. That is why financially, it is a good idea to effectively avoid probate and meet with an experienced attorney to create an effective estate plan.
In addition to the financial aspects of an estate plan, a thorough estate plan will also account for your future medical needs as well.
I concur with the sound advice of all three attorneys above, Ms. Brewer, Mr. Rossmeissl and Mr. Fromm. Meet with a professional to ensure your needs and objectives are met.
This answer is provided solely for informational purposes only. Any opinions stated in response to Avvo questions are based upon the facts stated in the question. This answer does not constitute legal advice, create an attorney-client relationship, and/or constitute attorney advertising in any form whatsoever.
Divorce Bank accounts in divorce Dividing debts in a divorce Community property in divorce Divorce and bankruptcy Bankruptcy Debt Bankruptcy and debt Joint tenancy Rights of survivorship Real estate and bankruptcy Real estate Estates Estate assets Estate property Rights of survivorship and estate planning Life insurance and estate planning Taxes and estate planning Gift tax Executor of will Probate Probate assets Incapacitation and elder law Trusts Successor trustee Living trust Revocable living trust Tax law