David Helverson, Vice President Investment Officer, who holds the Accredited Domestic Partnership Advisor Designation, with Wells Fargo Advisors, LLC in Chicago, seeks to address the unique financial challenges faced by domestic partners. This is the ninth article in a continuing series.
In past articles, we’ve discussed the importance of Domestic Partnership Agreements (or DPAs) for unmarried couples, for clarifyingamong other considerationsownership and division of assets, responsibility for liabilities, and respective contributions of income to household expenses. However, even if the DPA allows or calls for joint ownership of property, this form of ownership and wealth transfer is often misunderstood and fraught with unforeseen consequences.
Joint tenancy with rights of survivorship is a very popular form of ownership. Many people, married and unmarried, choose to register bank accounts, investment accounts, real estate and other assets in this form, as it is considered nonprobate property. In other words, if one joint tenant dies, the property held in this form passes to the surviving tenant(s) directly and does not pass through the deceased’s probate estate. This could save on time, expenses and administration, and may be helpful and efficient in allowing the survivor(s) control of and access to assets that could be restricted or encumbered in processing the estate. However, a portion or even all of the joint property will be included in the deceased’s taxable estate, and this is where some unexpected problems can arise.
