Sign Affidavit of Death

How to eSign a document: Affidavit of Surviving Joint Tenant (PDF) form

Music welcome back I'm Greg with the Ashcraft firm and I'm an estate planning attorney and over the last couple of weeks we've talked about two of the ways to pass property at time of death and this week we're going to talk about the third way to pass property at time of death so week one we talked about a state and how if you do nothing your property will pass through probate and we talked about the pros and cons of that and then we - we talked about passing property by contract and we talked about the pros and cons of passing property that way and then this week we're going to be talking about the pros and cons of passing property through joint tenancy so what do we actually mean when we're saying we're passing property by joint tenancy so usually this phrase is actually used in deeds and joint tenancy is shorthand for joint tenancy with right of survivorship and this is the other way to hold property rather than tenants in common so typically you either hold it sole and separate you hold property just by yourself or you hold property as tenants in common or you hold property in joint tenancy so if you're holding property with more than one person you either have to hold it and enjoy tenancy or tenancy in common so if you hold the property as tenants in common then that means that you just own a percentage of the property in the same way you would as separate property meaning like let's say we hold the property 50/50 as tenants in common so let's say my my wife and I hold our property as tenants in common 50/50 if I have 50% of the property and if I pass away then that 50% of property that's held as tenants in common we'll pass through probate okay so I hold that property I can actually make agreements with people where when I pass away I pass my tenant in common share to anyone it doesn't have to go to somebody automatically who's on the deed so I could I could write in a will for instance I could say my tenant in common share of my house that I hold jointly with my with my wife as tenants in common that I give that property to my son or something like that when you hold property in joint tenancy with right of survivorship then you can actually so if I hold property with my wife like my my house if I hold that as joint tenants with my spouse then when I pass away it automatically passes to my spouse and so those are some of the pros some of the pros of this if you pass property that way it's automatic okay so let's say we hold property as joint tenants my wife and I and then I pass away all she has to do is file an affidavit of death of joint tenant with the County Recorder where we held that real property and then she automatically becomes the sole owner of that property and this avoids probate so so those are some of the the good parts of passing property in that way but there are lots of downsides to passing property in that manner so first we can't really name a contingent beneficiary so we can't say unless we just keep adding people as joint tenants on our property so let's say that after my spouse passes away I want my children to inherit that property the only way to make them contingent beneficiaries is really to add them on to the deed as joint tenants so then we all own this property as joint tenants then we have lifetime problems so the next downside of holding property this way is you're no longer in control so let's say that we did want to name our children as contingent beneficiaries after my my spouse and I pass away and so we add them all on to the deed now we're not we're no longer in control of our property so now when we want to sell that property we have to get them to write to sign off on the sale now while while you're while you have your wits about you or while you're still young this may not be an issue to you because your kids are gonna sign off on it they write like they're gonna they're gonna consent to whatever kind of sale you have but as you get older your kids are gonna think that they know what's best for you and then so then you're losing that element of control that you have over that property so that's one of the other downsides of holding property as joint tenants if you are putting your kids on your deed or something like that or if let's say you hold your bank account jointly so this doesn't just have to do with deeds and real property you can hold your bank accounts in joint tenancy as well and if you do that you're no longer in control let's say that you're your child who you've put on your bank account is a joint tenant now falls into financial problems let's say they started a business and the business failed and now they have creditors coming after them now they can come after your assets as well because you hold those property net property jointly they can go after your property now too so those are some of the issues that come with holding property as joint tenants and then finally one of the problems that you're trying to avoid is the cost and time associated with probate when you hold property this way and so a lot of people actually they don't hold properties joint tenants I want to step back and address the issue of just deeding your property over to those people that you want to inherit the property anyway some people go that way instead of other methods of transferring property so they don't wait till they pass away they just give the property while they're living that's a that's essentially what you're doing when you hold property as joint tenants you're giving a property right in that property while you're living and so there are lots of tax consequences with either just deeding a property over outright or holding property as joint tenants and I'm going to go over what some of those tax consequences are and really I need to do that by drawing it out for you all right so I've drawn up here the tax consequences of joint tenancy or gifting property while you're still live so they're really the same tax consequences so I wanted to talk to you about it together because a lot of people think that it's a good idea just to give away their property while they're living then they don't have to go through the whole process of probate and things like that there are major tax consequences to passing your property that way or by holding property as joint tenants and I want to show you what those are okay so let's say and this applies to any type of property that increases in value but I'm doing it I'm showing you this this house okay so let's say we purchased the house let's say we purchased the house in 1990 at $100,000 and let's say that that increased to today in 2017 let's say that increased to $300,000 so this hundred thousand dollars is our tax basis so there are things you can do with your taxes that will make the tax basis either increase or shrink but for the reasons of keeping everything simple let's just say you didn't do any of those things you didn't make it increase or decrease so now your tax basis is a hundred thousand dollars when this house increases two hundred thousand dollars in value to three hundred thousand dollars now if you sold the property let's say you're you're not passing the property at all but let's say you sold your own property you're going to have to pay capital gains tax on all of this and so that capital gains tax on the two hundred thousand it used to be the long term little gains tax was a simple 15 percent across-the-board now it can go up to 2 23.8% this is federal and then you can add at least another 9% on that for the state of California so that's a at least a quarter of this is going to be taxed is going to be the tax that you pay so if that's a quarter of two hundred thousand then we're talking about 50 thousand dollars here now if you add your child on to your deed now we have already talked about all the other downfalls of adding your child to your deed but let's say you add your child on to your deed and they don't have any financial problems they didn't hold it over you while you're a living they let you sell property that you need it to and things like that let's say all of that was fine now you pass away and when you pass that property is worth $300,000 it hasn't gone up any and now they turn around and sell it they're going to be paying tax on this $200,000 as if it's increase they're gonna pay capital gains tax on that on that property and this is true of any property when they sell that when they liquidate that property they're gonna be paying the tax on that so it's going to cost them fifty thousand plus in this scenario to pay the taxes on that now let's talk about passing property at death so let's look down here so let's say instead of passing the property either during your lifetime or passing property through joint tenancy let's say instead you pass property through a will or a trust now it's still true that if you if you're selling property yourself like you haven't passed away we're in 2017 here so you purchase the property in 1994 a hundred thousand dollars same facts is here and then in the year 2017 it's worth three hundred thousand dollars which is that's not outside of their own possibility that that happens a lot of those types of increases now let's say that you sold that property then you would be subjected to that tax on the two hundred thousand dollars as if as if it's an increase now you may be thinking well I've sold my primary residence before and I didn't pay a big load of capital gains tax there are ways that the the owner of a primary residence can avoid these types of taxes so that's why you didn't pay the tax if it was your primary residence now if it was a rental property or something like that an investment property you did pay taxes on that if you sold it however if you put your kids on your deed as joint tenants or you gifted the property while you're alive your kid is not the owner of this property and can't avoid these taxes however if you give in a will or trust and you pass away and they inherit that property then they get what they call a step-up in basis to the date of death so the time that you passed away let's say it was worth three hundred thousand dollars still and it didn't increase in value at all and your kids turn around and sell it the next day they pay instead of fifty plus fifty thousand dollars plus they pay nothing in taxes in capital gains tax so it pays to pass your property through a will or trust here's the problem though if you remember from week one a will goes through probate but next week we're going to talk about how a trust can avoid probate and avoid these negative tax ramifications so let me just recap everything that we talked about earlier the pros of joint tenancy are one that it's automatic as soon as somebody passes the other joint tenant becomes the owner of that property and because of that - it avoids probate now the downsides of holding property and joint tenancy are that you can't create any contingent beneficiaries and if you keep adding on joint tenants then you lose more and more control because they all have to consent over anything you do with that property now third you've done all this joint tenancy maneuvering to avoid all the fees that are associated with probate oversight however you're probably going to end up paying more in taxes in the long run so I hope you enjoyed watching this video and if you're interested in hearing when the fourth and final video goes live you can fill out your name and email address there's gonna be a pop-up that comes up after this video and then we will tell you when that goes live thanks again for watching Music