Many people, especially married couples, hold real estate, securities, and other assets as "joint tenants with right of survivorship" (JTWROS). With this arrangement, if one co-owner dies, the other co-owner automatically inherits the property.

Advantages: Property owned as JTWROS avoids the time and expense of probate. This is a simple, inexpensive way to keep property from the probate process. Moreover, one co-owner can handle the asset if the other is incapacitated.

Drawback: Using JTWROS limits your flexibility. If you hold all of your assets with your spouse, they’ll all be inherited by your spouse. Nothing can pass to your other heirs, such as your children, no matter what you say in your will.

Suppose, for example, the federal estate tax is restored in 2011, with a $1 million exemption. John and Mary Smith have total assets (house, IRA, life insurance, bank accounts, etc.) of $1.6 million. If they’re all owned as JTWROS, they’ll all wind up with the surviving spouse.

At the surviving spouse’s death, estate tax might be steep. That could have been avoided if the first spouse to die had left some assets to the Smiths’ children.