It is a common misconception that holding title as joint tenants will avoid probate. Holding title to an asset in joint tenancy with another person (usually your spouse) merely postpones probate until the death of the second spouse. Moreover, by holding title as joint tenants, you adversely affect the "income tax basis" of your assets because you only receive a 50% "step-up" in the basis at the death of the first spouse.

For example, if a house was purchased for $100,000 twenty years ago, and was worth $300,000 at the time of the first spouse's death, the surviving spouse would only receive a 50% step-up in the tax basis, meaning the surviving spouse's tax basis would be $300,000. That means that the surviving spouse would have to pay capital gains taxes on the $200,000 in appreciation if the house were sold. This computes to approximately $40,000.

It is much better if you are married to hold title to your assets, including your home, in "community property." That way, the surviving spouse would receive a 100% "step-up" in basis and then would not have to pay income tax if the house were sold following the death of the first spouse.

Additionally, you should never add your children on the title with you as joint tenants, as they would then become co-owners of your property. That means YOU need their permission to sell or mortgage YOUR property. It also means that your property is subject to the claims of your children's creditors, including their ex-spouse!

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