Holding property jointly, with right of survivorship, appeals to many married couples. After the death of one spouse, ownership will pass directly to the surviving spouse, without the cost, time, and public record of probate.
There are disadvantages, though. Joint ownership automatically excludes anyone else from inheriting that property, regardless of what you have in your will.
Say you own a beach house. If you own the house jointly with your spouse, he or she will inherit it. That will be the case even if your will states you’d prefer to leave the house to your sister, for example, or to your children from your first marriage.
Joint ownership robs you of flexibility in your estate tax planning. If you have all your property in joint name with your spouse, all of your assets will pass to your spouse at your death. Nothing can be left to your children, to take advantage of the federal estate tax exemption, which is $2 million from 2006 through 2008.
When your spouse dies, all the marital assets may be aggregated in his or her estate, subject to estate tax. Therefore, it might be wise for each spouse to own some assets individually.
