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What happens to joint property if one owner has debts?

Even British Columbia residents who do not yet have an estate plan often understand the utility of having one. Making sure that surviving loved ones receive the inheritance they intend requires careful planning, but even with it, some obstacles could arise. For instance, what happens to joint property prior to death could derail the best-laid plans if a joint owner has unpaid debts or too much access to the asset.

Many British Columbia residents may add another as an owner of an asset in order to avoid probate. It makes sense since upon the death of one owner, the other receives full ownership of the property if the documents are correctly executed. However, there are significant risks in using this estate-planning tool.

If one of the joint owners of the property has debts, a creditor may make a claim against the property in order to satisfy the debt. For example, placing a lien on the home for the unpaid debt of a joint owner could prevent selling the property and could prevent the intended disposition of the property. Another risk arises when an individual adds another part to a deposit account. That joint owner receives full rights to half of that account, and if only one signature is needed to withdraw funds, it could be depleted, and it would be perfectly legal.

These and other risks do not make adding another person to a piece of property a bad idea. However, any British Columbia resident wanting to take this step may want to gain a clear understanding of what happens to joint property once that other person receives part ownership in it. Speaking with an experienced estate-planning lawyer before making a final decision could help that individual make an informed decision and possibly take additional steps to protect the asset from creditors and even from the other joint owner.

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