People often yoke their legal interests in property together with a joint tenancy, tenancy by the entirety, or bank account in joint names and payable to the survivor.
By holding property jointly, the owners are bound to each other.
A joint interest causes the owners to move in the same direction with respect to jointly held property like a wood yoke around the necks of draught animals causes them to move in the same direction when pulling a load.
Edward Volkert.
The yoke of a joint interest weighs heavy on a joint tenant due to the tax implications of creating a joint interest and death of a joint tenant.
I.R.C. § 2040 generally requires inclusion of the entire value of a joint interest in the gross estate.
The fact that a deceased joint tenant holds a one half interest in a joint tenancy prior to death is not determinative of the amount included in the gross estate.
Only exceptions to the general rule take underlying economics into account and, in the case of spouses, the underlying economics are not taken into account at all.
Edward Volkert.
The yoke of a joint interest is a potential tax trap for the unwary. This is a burden that many bear due to typical estate planning advice.
Advisors often recommend holding title as joint tenants with rights of survivorship. Although it is generally understood that this avoids probate, few also advise on the gift, estate, and income tax implications that follow.
All, a part, or none of the value of jointly held property is included in the gross estate regardless of the value of the deceased joint tenant’s interest prior to death.
A risk also exists that records are not adequately maintained to satisfy the burden of proof for favorable exceptions.
Edward Volkert.
Many, particularly those with a taxable estate, may wish to throw off or avoid the yoke of a joint interest.