Oran Hall | Joint tenancy and taxes

QUESTION:

I am seeking your advice on how to apply for joint tenancy with my mother. The title for our home was done in my father's and mom's name. My father died over 15 years now and I am still living at home with my mom, who is now 95. I am her only child. She has made a will to indicate that all her worldly goods, including our home, should be passed to me when she dies. Friends have been asking why I don't apply for joint tenancy to avoid all the hassle and taxes when she passes. Kindly advise what I should do to achieve this.

Greer

FINANCIAL ADVISER:

Your friends have given you good advice, just that it needs some modification. You cannot make any change to the status of that property, only your mother can.

She would have to make an inter vivos transfer by way of gift to you and add you as a joint tenant. An inter vivos transfer is one made while the transferee is alive. As your friends suggest, this is a cheaper way to transfer the asset to you as the transfer tax of 5 per cent would apply only to one half of the value of the property. By way of illustration, if the value of the property was $10 million, the tax would be on $5 million.

This approach is also less time-consuming and eases problems which so often arise after the death of individuals, not that you yourself would likely face such challenges. Additionally, the longer it takes to transfer property, the higher the value gets and the higher the charges associated with the transfer become.

COMPETENT ATTORNEY

It would be prudent to engage the services of an attorney-at-law who is competent in such matters, as it would be necessary to draft the instrument of transfer and the statutory declaration of value. The latter states the value of the property and is required by the Stamp Duty & Transfer Tax Section of Tax Administration Jamaica, popularly known as the 'Stamp Office', to enable it to make its own assessment of the value of the property and thus determine how much you should pay to the Government.

The transaction would also require the payment of nominal charges at the National Land Agency for your name to be formally added to the title, but I do not believe it is absolutely necessary to incur the expense of engaging legal services for this phase if you have the time and if you are willing to ask the National Land Agency how to proceed.

The right of survivorship is a distinguishing feature of joint tenancy. This means that the property so owned passes automatically to the surviving owner upon the death of the other without the need for a will and the probate thereof. This is, therefore, a cost-effective and quick way of passing property from one person to another.

If you have not yet done so, you should make a will making it clear to whom your assets should go after you die, and it is also important to include a residuary clause in your will to cover any asset that is not specifically named for distribution in your will.

I suggest you help your mother to set things in motion immediately.

- Oran A. Hall, principal author of 'The Handbook of Personal Financial Planning', offers personal financial planning advice and counsel. finviser.jm@gmail.com