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It means that a creditor of any of the joint tenants can seize the entire property and force a sale to satisfy the debt . That’s right, it is possible for a joint tenant to lose their interest in a property because of the debt of another joint tenant. Typically this occurs in three ways: Taxes: If any joint tenant fails to pay their personal income taxes, the IRS can place a tax lien on the entire property and take everything, including the other joint tenants’ interest in the property to satisfy a personal tax judgment. Bankruptcy: If any joint tenant files for bankruptcy, the property can be sold to pay their debts even though the other joint tenant(s) isn’t involved in the bankruptcy and had nothing to do with the debts. Legal issues/Judgments: If a joint tenant gets sued — maybe for a car accident or because they owe someone money, a judgment against them can force the sale of the entire property to pay for the damages even though the other joint tenants had nothing to do with the debt or accident. Gifting Gaffs. It’s not uncommon for people to give others, such as Fin Lit Trivia Fin Lit Trivia Fin to how you want to own it. For example, imagine you bought a snowmobile with a friend who stores it in his garage. Suddenly, you and the friend have a falling out and he denies you access to the garage. Anticipate problems and devise solutions. Hash out the details of possession, use and costs . Put the agreement in writing. If the asset is valuable or potentially valuable, consult an attorney! Reflect on Learning: Can you list the pitfalls of joint tenancy? Survivorship (if that was not what you intended); access to funds in the case of a bank account, restrictions on sale, exposure to loss for another's debts, difficult to "ungift", should include agreement as to use and access. What character traits would you look for in a co- owner? Do you have character traits that would make you a good co-owner? IV. The Pitfalls of Joint Credit Co-borrower. When people buy something as co-owners , they often apply together for a loan to finance the purchase. Taking out a loan with someone else and putting your name on the loan application makes you a co-borrower . A co-borrower relationship can be a dicey proposition because your financial fate rests in another person’s hands. This is due to the fact that, as a general rule, a co-borrower is 100% liable for the entire debt regardless of any arrangement about splitting responsibility for repayment or sharing access to PRODUCT PREVIEW Costly Uncoupling The most expensive divorce settlement to date was between Russian billionaire Dmitry Rybolovlev and his wife Elena. They split an estimated $8.8 billion fortune after 20 years of marriage. a family member or a fiancé, a joint tenant interest in a property. Sometimes it’s meant as a gift; sometimes the goal is to provide the other person with an asset that can help them build credit. This happens most often with a family home. These arrangements can be very hard to undo if the relationship goes sour . It can require a long and expensive legal battle to “ungift” a joint tenant interest. Also, keep in mind that as soon as that person becomes a joint tenant, the entire asset is exposed to loss for their separate debts. Planning Your Co-Ownership. Before you enter into a co-ownership arrangement with someone else, talk about it. Reach an agreement as
THE 21st CENTURY STUDENT’S GUIDE TO FINANCIAL LITERACY 313
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