9. Does putting property in joint names avoid the need for wills and trusts?

Putting assets in joint tenancy with the right of survivorship (JTWROS) has a number of advantages:

1. The property automatically passes to the survivor, without having to go through probate. (The survivor does need to get the title changed.)

2. In the case of a bank account, the joint owner can use funds for the other's medical expenses and other costs.

3. Using a joint tenancy is "free," done by the bank or broker, and the real estate company if you start out with that title.

There are disadvantages:

1. Adding someone's name to your property creates an immediate gift for real estate and stock bond certificates. If the value is more than $12,000 (this year, at least), you have to file a gift tax return, and you may use up your available tax-free gift exemption or even owe a gift tax. Nevertheless, the gift amount comes back into your estate for estate-tax calculation purposes.

2. You can't undo the gift, for real estate or stocks and bonds, unless the recipient agrees to it.

3. Joint tenancy on a bank or securities account usually is not a gift until the other person makes a withdrawal of cash or other financial assets that he or she did not contribute. Then you can file your gift-tax return.

4. Any gifted property keeps the giver's original value. Thus, if you add a child's name to your house deed, upon a later sale the child is facing a huge capital gain. If he or she inherited it and then sold it, there would be little or no capital gain.

5. The joint tenant can run off with the funds, or spend them and have no assets left to sue against, or use the property interest as collateral. His or her creditors may be able to go against the property. Estranged spouses may make claims against it.

6. If a parents adds one of several children to an account, to help pay bills or for other convenience, it can cause real resentment among the others, especially if the child decides not to "gift" portions of the account to the others after the parent dies. (The child may not want to pay gift tax.) You can accomplish the helping goal with a power of attorney rather than co-ownership.

7. If a parent puts all of the children on and one predeceases, that one's children will inherit nothing -- the other joint owners will divide up the sibling's share.

A living trust avoids all of the above problems, and also avoids probate for those assets.