Q: You recently alluded in a column that property should not be held in joint tenancy with children. I think everything should be held in joint tenancy and see absolutely no reason whatsoever to do otherwise. Are you trying to make things difficult and make more money by forcing these things into court?

A: I have written several columns on just this point, but let's run through a few of my concerns. First, for clarification, joint tenancy means if one person on title dies, ownership vests in the other title holder or holders without the need for probate, although some paperwork outside the Court procedure might be needed.

If you are married, unless there is a business, legal, or personal reason otherwise, everything should be in joint tenancy with your spouse. Or if you have only one child and no spouse, then maybe joint tenancy ownership could be considered. Finally, certain assets with small values such as a checking account, can be so titled to help to continue paying bills after you die. But everything?

If you place someone else's name on title with you, a gift has been made for half of the value. If the total transfers, including this one, to that person exceeds $11,000 during a calendar year, then a gift tax (approximately 42% combined state and federal) must be paid on the excess, unless the excess is deducted from your estate tax exemption ($1,000,000) through the timely filing of a return claiming that exemption.

Also, if an appreciated asset is involved, then the receiver gets your basis (what you paid for the asset), so if thereafter the property is sold, the same capital gains treatment would be imposed as if the giver had not transferred the property.

In general, if the asset is inherited, then the receiver will get a new basis for capital gains purposes at its value at date of death, because the asset was exposed to possible estate taxes. Thus, the general estate planning rule is that it is much better for income tax planning to inherit an appreciated asset instead of having it gifted.

Next, if you make a gift, then you cannot take it back without the other's permission. Thus, you lose control. For possible perceived fears, you have lost economic independence.

What happens if the gift recipient gets a divorce or runs into financial difficulty? The part given to the giftee could be entangled in those proceedings and lost. Or what if a child wants to take his "inheritance" now? A sale of the entire asset can be forced. Even worse, the beneficiary could sell his or her percentage share and now you must deal with a third party. As has happened more than once here in Fort Collins, dad or mom could have the house sold out from under him or her, or discover a new co-owner and be forced to pay rent.

What happens if one of the children predeceases you? Title then reverts to the others on title and the descendants of the deceased are disinherited. If everything is in joint tenancy, then adjusting your Will to compensate that family line will prove meaningless, since joint tenancy assets are not controlled by the Will clauses. If you try to take some of the property back to treat the family line like everyone else, but someone on title refuses, then that naysayer's interest can not be affected. (In fact, some banks based in California say title must remain exactly the way it was set up.) And do not forget that a gift is made when a recipient puts the property back in the name of the original donor, thus possibly triggering gift taxes!

We have only scratched the surface, but one final point must be made: what are you trying to avoid, anyway? If you are trying to avoid "probate," remember that court settlement proceedings ("probate") in Colorado are relatively easy, quick, inexpensive, and user-friendly, unlike many states. As a general statement, the work and expense involved in avoiding court will exceed the cost and work using the court.

So talk to your lawyer, your CPA, or even a financial advisor before you just blindly put everything in joint tenancy. You still might do so based upon his or her guidance, but then you or your estate will have someone to sue if any one of these or other "horrors" happens.