TL;DR

• Joint tenancy with right of survivorship passes the home to the surviving co-owner automatically at death, avoiding probate — which is why families use it.
• But it generally gives only a partial step-up in basis (on the deceased owner’s share), unlike a full step-up through inheritance or a properly structured trust.
• It exposes the home to the joint tenant child’s creditors, divorce, and judgments the moment they are added.
• It can trigger gift and Proposition 19 consequences, and it ties your hands: you generally cannot sell or refinance without the co-owner.
• Severing a joint tenancy is possible but does not undo every consequence — a review is the place to start.

Why families reach for joint tenancy

Joint tenancy is one of the oldest and most familiar ways to co-own property, and it has one feature that makes it irresistible as a do-it-yourself probate fix: the right of survivorship. When one joint tenant dies, their share passes automatically to the surviving joint tenant(s), outside of probate. So a parent adds an adult child as a joint tenant, figuring the home will pass to the child automatically and probate-free. It does avoid probate in that narrow sense — but it introduces a set of new problems that often outweigh the convenience, and that families rarely see until later.

The partial step-up problem

This is the tax catch that makes joint tenancy quietly expensive. As discussed in our guide on the lost step-up, property that passes at death generally gets a “stepped-up” basis to its date-of-death value, while lifetime gifts carry over the original basis. Joint tenancy lands in between in a way that usually disappoints.

When a parent adds a child as a joint tenant and later dies, generally only the parent’s share of the home receives a step-up in basis at death. The child’s share — the portion they received when they were added during the parent’s life — generally keeps the original carryover basis. The result is only a partial step-up, where a home left to inherit (or held in a properly structured trust) might have received a full step-up. When the child eventually sells, the partial step-up can mean materially more capital-gains tax than inheritance would have produced. 

Your child’s creditors and divorce — now attached to your home

The moment a child becomes a joint tenant, they are a present co-owner of the home, not a future beneficiary. That means the home can be exposed to the child’s creditors, a divorce, a lawsuit, a bankruptcy, or a tax lien. If the child runs into financial or legal trouble, a creditor or an ex-spouse may be able to reach the child’s interest in the home — the home the parent still lives in. This is the same exposure that adding a child to the deed creates, and it is just as often a shock to families who thought of joint tenancy as a harmless convenience.

Gift, property-tax, and control consequences

Adding a child as a joint tenant generally involves the same gift and Proposition 19 issues as other transfers: it can require a gift-tax filing (gift tax rarely owed for most families, as of drafting) and can be treated as a change in ownership that triggers a property-tax reassessment, subject to the same parent-child rules and limits discussed elsewhere in this cluster. And as with adding a child to the deed, you give up control: a joint tenant is a co-owner, so you generally cannot sell or refinance the home without their cooperation, and you cannot unilaterally remove them. 

Can it be undone?

A joint tenancy can generally be severed, which converts it into a tenancy in common and ends the right of survivorship — but severing it does not undo everything. It does not erase a creditor or divorce interest that has already attached to the child’s share, it does not retroactively fix the basis consequences, and severing is itself a step with potential tax and property-tax implications. Whether severing helps, and how to do it cleanly, depends on the specific situation and what you are trying to accomplish. As with the other moves in this cluster, the earlier it is reviewed, the more options there usually are. For guidance on your specific situation, call (650) 668-8000 or schedule a consultation at baylegal.com/contact.

A better tool usually exists

The goal behind joint tenancy — avoiding probate and passing the home to a child — is usually better met by a trust or another structure that can avoid probate while preserving a full step-up in basis, keeping the home insulated from the child’s creditors, and leaving you in control during your life. Joint tenancy can have legitimate uses, but as a DIY probate shortcut with a child it tends to trade a small, solvable problem (probate) for several larger ones. If you are weighing it, or unwinding it, it is worth getting the whole picture first. For guidance on your specific situation, call (650) 668-8000 or schedule a consultation at baylegal.com/contact.

Frequently Asked Questions

Does joint tenancy with my child avoid probate in California?

Generally yes, in the narrow sense that the home passes to the surviving joint tenant automatically at death, outside probate. But it creates other problems — a partial step-up in basis, exposure to the child’s creditors and divorce, and gift and property-tax consequences — that often outweigh the probate convenience. A trust usually accomplishes the goal without those drawbacks.

How does joint tenancy affect the step-up in basis?

Usually unfavorably. When a parent adds a child as joint tenant and later dies, generally only the parent’s share gets a step-up to date-of-death value, while the child’s share keeps the original carryover basis — a partial step-up. Inheritance or a properly structured trust may produce a full step-up, which can mean less capital-gains tax when the home is sold. Confirm the treatment with a tax professional.

Can my child’s creditors reach my home if we own it in joint tenancy?

Potentially, yes. A joint tenant is a present co-owner, so the child’s interest in the home can be exposed to their creditors, a divorce, a lawsuit, or a bankruptcy. This is one of the main risks of adding a child as a joint tenant to a home the parent still lives in.

Can I undo a joint tenancy with my child?

A joint tenancy can generally be severed, ending the right of survivorship, but that does not undo every consequence — it does not remove a creditor or divorce interest that has already attached, nor fix the basis treatment, and severing has its own potential tax and property-tax implications. Whether and how to sever depends on your situation and is best reviewed with an attorney.

Is joint tenancy or a trust better for leaving my home to my kids?

For most families, a trust. A trust can avoid probate while preserving a full step-up in basis, keeping the home insulated from a child’s creditors, and leaving the parent in control during life — advantages joint tenancy with a child generally does not provide. The right choice depends on your circumstances and should be made with an attorney.