Is it advisable to transfer my assets into joint names with my children to avoid taxes and probate fees?

Transferring assets into joint tenancy (where you and anyone else owning the property own an equal, undivided interest in the property) has the benefit of being relatively inexpensive, ensuring that the property passes directly to the surviving joint tenant on death, and allowing you to maintain some control over the property because of your continued ownership interest in the property. However, there can be disadvantages to owning property in joint tenancy simply to avoid probate fees. Where one of the joint tenants becomes incapacitated, the joint tenancy will continue until one of the joint tenants dies. Because it is an absolute gift of one half of the property, there is a loss of some control – you cannot undo the transfer unless the recipient agrees to transfer their share back to you. The transfer of capital assets to joint tenancy is considered a disposition for tax purposes, and so may attract capital gains or other income tax consequences. Putting an asset into joint tenancy also exposes part of the asset to claims of the other person’s creditors. In the case of a child who has financial or marital difficulties, this can result in your asset being tied up as a result of those claims.

We recommend that you consult a lawyer if you are contemplating transferring an asset into joint tenancy for the purpose of minimizing tax consequences on your death.