The Pitfalls Of Joint Ownership..
I was talking with a friend of mine this morning and she mentioned that she and her fiancee were purchasing a home and that she was going to "half owner". I told her that was a grave mistake and she didn't believe me. I would like to get all the facts to present to her why the home should be owned by one person.....and preferably not have any name on record...should be owned in a land trust.
Can anyone offer advice or direct me to prvious posts?
Thanks
Jason
Jason:
I'm not an attorney, so this obviously doesn't qualify as expert advice.
I don't see why it's such a no-no to have 2 people on the title or mortgage in every situation?
In some cases, it makes sense to have a single owner, or even a trust as title holder, maybe to keep assets hidden from lawsuit-hungry citizens, but not in every case.
For example, my wife and I are both on title and mortgage: I did this to support her application for resident alien status. It also helps her get her own credit history going.
I can see some pitfalls, too: divorce and asset allocation; one partner gets into credit trouble and pulls the other down with them; divorce and getting the other party to sign off on a sale/transfer of title, etc.
Can you explain why this would be such a "grave" mistake for this couple? Or why you think this is such a "grave" mistake in all cases?
Andy
Hi Andy,
Basically Not owning the property jointly eliminates alot of possible problems whereas if you have joint ownership you "Could" leave yourself at risk. "Could" is an aweful lofty chance to take. As I see it you have 50% chance of something undesirable happening and 50% chance of nothing happening. I subscribe to the theory that you never know what might happen tomorrow, so protect yourself as much as you can so that your odds are the highest. Especially when proper estate planning is as easy and cheap to accomplish with the correct information.
The reasons you stated are some of what I'm describing. Joint Tenancy can be disastrous in remarriage, estate tax problems, and judgements against a joint owner can attach to assets held jointly with another.
There are Pros and Cons in joint ownership and you should evaluate your specific situation to understand the consequences of JO.
Sincerely,
Jason
Hey Andy,
I apologize in that I didn't really respond to your post. It is not such a no-no in all situations depending on your needs. Your situation is understandably different from my friends in and creates a unique need for you and yours. My friends situation is different and has different characteristics, ie. family from previous marriage and a few other things.
My main concern for my friend is protection from lawsuits in her specific situation. Lawsuits can happen at anytime and to anyone as I've been down that road and seen firsthand frivolous attacks thrown at me from just the otherside of Mars. It can happen to anyone.
As an investor with many homes, I feel it is very important to look as "broke" as I can and not even show up on record as an owner of anything because helps deter preditors.
Sincerely,
Jason
Seems to me, you're friend is buying a principal residence, co-owning it with her husband. I know it's POSSIBLE to keep a husband and spouse's credit from becoming intertwined, but it's dawggone difficult. And, unless they want to sign a pre-nupt, things would get messy anyway, in the case of a lawsuit... Just my .02, anyways.
Any type of arrangement 50-50 is asking for trouble. If you two have a dispute--the only remedy is court. There should be one majority owner even is the split is 49.9999 to 50.0001