Last time, I reviewed three of the most common estate planning mistakes and their consequences (Read: What not to do in estate planning).

The three mistakes are: failing to prepare a will; failing to keep your will up-to-date; and the DIY will. Unfortunately, the mistakes don’t end there.

Here are two other common mistakes that help keep estate litigators in business and underscore the value of working with an estate planning expert: unwise use of joint tenancies, and keeping your will too simple.

1. The perils of joint tenancies

There are two basic types of joint ownership: tenancy-in-common and joint tenancy with right of survivorship (JTWROS). The latter is not recognized in Quebec. Tenants-in-common share a specified portion of ownership rights in property. Their shares may be equal or unequal.

Upon the death of a tenant-incommon, their share forms part of their estate to be distributed under their will or on intestacy.

This may be the preferred ownership arrangement if parents bequeath a cottage to their children in the hopes of keeping it in the family.

The idea is the children will in turn bequeath their shares to their children in their wills.

In a JTWROS, two or more people each own an undivided interest in the whole property. Joint tenants share equal ownership and have equal rights to keep or dispose of the property. On the death of a joint owner, the property goes to the surviving joint tenant or tenants, not to the deceased joint owner’s estate.

Going back to the cottage example, if the parents transferred their interest to their children as joint tenants, the last to die of the children would ultimately become the sole owner, with power to deal with the cottage as they please. Such an arbitrary and unpredictable cottage succession plan is generally not what the parents intend.

JTWROS has traditionally been the preferred asset ownership arrangement between spouses in a first marriage situation. Such a structure often simplifies the administration on the death of the first spouse, with the asset (family home, cottage, bank/investment accounts) automatically going to the surviving joint tenant.

But if the ultimate goal is to bequeath the asset to someone other than the spouse, or if there are special considerations such as creditor issues or a spouse with special needs, this arrangement may not work.

JTWROS and spousal trusts are mutually exclusive and, as such, the former arrangement may not be advisable in subsequent marriage situations.

Over the past several years, certain jurisdictions have witnessed a new trend in JTWROS—an increase in the incidence of this ownership arrangement between parents and adult children. This typically follows the death of the first parent. The widow or widower may then make assets joint with one or more children.

The family often sees this as les troublesome than acting under a Power of Attorney for property where the parent would benefit from assistance in managing their financial affairs.

Parents are pleased because they believe they’ve simplified the future administration of their estates and, most importantly, are avoiding/reducing probate (Estate Administration Tax, in Ontario) and perhaps even the costs of preparing a will. But JTWROS may end up complicating matters and increasing both the complexity and costs of administering the estate.

Probate fee planning is often a significant concern in jurisdictions with relatively high rates (Ontario and B.C. rates, at 1.5% and 1.4%, respectively, are the highest). Although it may be possible to reduce/eliminate probate fees using JTWROS, this potential advantage must be weighed against the many disadvantages.