How Jointly Owned Property Passes at Death in Kentucky

One of the most common misconceptions I encounter in estate planning and probate work is the belief that adding someone’s name to a deed or bank account is a simple substitute for a will. “I’ll just put my daughter on the deed” or “I already added my son to the bank account, so it’ll go to him when I die.” While joint ownership can accomplish some goals, it also creates risks that most people don’t consider — and in Kentucky, the consequences can be significant.

How Joint Ownership Works in Kentucky

Kentucky recognizes several forms of joint ownership, and the legal consequences vary depending on the type:

Joint tenancy with right of survivorship. When property is held in joint tenancy with a survivorship clause, the surviving joint tenant automatically receives the deceased tenant’s share at death — outside of probate. The property passes by operation of law, not through the will. This is the form of ownership most people have in mind when they add a family member to a deed or account.

Tenancy in common. By contrast, when property is held as tenants in common, each owner’s share passes through their estate at death — it does not automatically go to the other owner. In Kentucky, a conveyance to two or more people is presumed to create a tenancy in common unless the deed expressly creates a joint tenancy with survivorship. This default catches many families off guard.

The Risks Most People Don’t Consider

Creditor exposure. When you add someone to a deed or account, their creditors can potentially reach that asset. If your child has a judgment against them, a divorce, or a bankruptcy, the property you intended to pass to them at your death could be at risk right now.

Gift tax implications. Adding someone to a deed can constitute a taxable gift for federal gift tax purposes. While Kentucky doesn’t impose a gift tax, the federal implications can be significant for larger properties.

Loss of control. Once you add a joint owner, you generally can’t sell or refinance the property without their consent. You’ve given up sole control over an asset that may be critical to your financial security.

Unintended disinheritance. Joint ownership with survivorship passes property to the surviving owner regardless of what your will says. If your will divides your estate equally among three children, but your house is jointly owned with only one of them, that child gets the house plus their one-third share of everything else. The other two children receive less than you intended.

Capital gains consequences. When property passes through an estate at death, the beneficiaries receive a “stepped-up” basis for capital gains purposes — generally the fair market value at the date of death. Property received as a gift during life does not get this step-up, which can mean a much larger tax bill if the property is later sold.

Better Alternatives Usually Exist

A properly drafted will, a transfer-on-death deed (available in Kentucky under KRS 382.700 et seq.), or a trust can often accomplish the same goals as joint ownership — without the risks. The right approach depends on your specific circumstances, but it’s almost always worth a conversation before making a change that’s difficult to undo.

If you have questions about how joint ownership affects your estate plan, call me at (859) 225-9540 or use the contact form.

Joseph D. Buckles is an attorney at Buckles Law Office, PLLC in Lexington, Kentucky.