Joint tenancy with the right of survivorship is a type of property ownership in the United States that is commonly used by married couples, business partners, and family members. This type of ownership allows two or more people to own a property together, and upon the death of one owner, that person’s share of the property automatically passes to the surviving owner or owners.
In this guide, we will explore the various aspects of joint tenancy with the right of survivorship, including what it is, how it works, the benefits and drawbacks of this type of ownership, and how to set it up.
What Is Joint Tenancy With Right of Survivorship?
Joint tenancy with the right of survivorship is a form of co-ownership in which two or more individuals hold title to a property. The key feature of joint tenancy with the right of survivorship is that when one owner dies, their share of the property seamlessly passes to the surviving owner or owners. This means that the surviving owner or owners will inherit the deceased owner's share of the property without probate.Get Free Quotes
The right of survivorship is an important aspect of joint tenancy because it ensures that the property passes seamlessly to the surviving owner or owners. In other forms of co-ownership, such as tenancy in common, the deceased owner's share of the property will pass according to their will or intestacy laws, which may involve probate proceedings.
How Does Joint Tenancy With Right of Survivorship Work?
Joint tenancy with the right of survivorship is a form of co-ownership of property that provides for the automatic transfer of a dead owner's share to the surviving owner(s). To create a joint tenancy with the right of survivorship, a few requirements must be met.
- The owners must acquire the property at the same time: Joint tenancy requires that all owners acquire their interest in the property at the same time and from the same source. This means that they must either purchase the property together or inherit it together.
- The owners must have equal ownership shares: Joint tenancy requires that each owner has an equal share in the property. For example, if there are two owners, each would own 50% of the property.
- The owners must have the same right to possess and use the property: Joint tenants have an equal right to possess and use the property, which means that they can't exclude each other from any part of the property.
- The title must explicitly state that it is a joint tenancy with right of survivorship: Right of survivorship is never assumed; it must be stated plainly.
Once the joint tenancy with right of survivorship has been established, the owners have certain rights and responsibilities. Each owner has an undivided interest in the property, which means that they have an equal right to use and enjoy the property. This also means that they are responsible for paying an equal share of the property expenses, such as taxes, mortgage payments, and repairs.
When one owner dies, that person’s share of the property automatically passes to the surviving owner(s) without going through probate. The deceased’s shares of the property will be absorbed by the survivor(s). For example, if three people hold the title (33.33% each) and one dies, the other two become 50% owners.
Important: Joint tenancy with the right of survivorship is a legal relationship that can only be dissolved by court order. Therefore, if one owner wants to sell or transfer their share of the property, they will need the consent of the other owners, or they will need to seek a court order to dissolve the joint tenancy.
Benefits of Joint Tenancy With Right of Survivorship
Here are some benefits of joint tenancy with the right of survivorship.
Avoidance of probate.
One of the biggest benefits of joint tenancy with the right of survivorship is that it avoids probate. When one owner passes away, his or her share of the property automatically transfers to the surviving owner(s). This will most assuredly save time, money, and hassle.
Joint tenancy with the right of survivorship is a relatively simple way to own property. It doesn't require any complex legal documents or trusts, and it's easy to set up.
Protection from creditors.
If one owner has creditors, his or her share of the property may be subject to creditor claims after death. However, under joint tenancy with the right of survivorship, the surviving owner(s) will own the entire property, which can help protect it from creditors.
Avoidance of estate taxes.
Joint tenancy with the right of survivorship can help avoid estate taxes in some cases. As soon as one owner passes away, he or she no longer owns a share of the property, and therefore it can’t be taxed as part of their estate.
Joint tenancy with the right of survivorship can help prevent family disputes over property. Because this legal arrangement must be set up when the property is purchased, everyone in the family should have plenty of time to get used to the idea.
Drawbacks of Joint Tenancy With Right of Survivorship
Perhaps the biggest drawback of JTWROS is that it can’t be added later. Older parents, for instance, can’t make adult children co-owners in the home the parents already own, not without retitling it. Co-ownership must be established from the start.
Here are three more important considerations if you’re thinking of entering into a joint tenancy with right of survivorship.
Co-ownership does not wait till death.
Adding someone to the title, such as you might quickly do by retitling your property using a quitclaim deed, is an irrevocable transfer of present ownership. You might do this in anticipation of your death, but that person owns a share of the property right now, not later. Possible consequences are below.
A co-owner could force a sale.
One of the owners under a JTWROS could conceivably file a partition action in court to force a sale. The net proceeds would be distributed among the co-owners.
A co-owner could immediately sell his or her share.
Let's say you entered into a joint tenancy with right of survivorship with your brother. The next thing you know he has sold his share of the property to an ex-girlfriend to avoid the lawsuit she keeps threatening to file. And she would rather have cash, so she tries to force a sale (see above).
A co-owner could move in today.
Co-owners under a joint tenancy with right of survivorship have equal access to the whole property at all times. You thought you were only entering into a JTWROS so that when you pass away, a favorite nephew could take over the house. But let’s say a year goes by. The nephew stops looking for work, racks up a few DUIs, and he would really like to flop in his share of the home and play guitar. You can’t stop him—he owns the home too.
How to Apply for Joint Tenancy With Right of Survivorship
Joint tenancy with the right of survivorship may not be appropriate for everyone, and it's important to consult with an attorney or financial advisor to determine if it's the best option for you.
Take the following steps to apply for joint tenancy with the right of survivorship.
Check your state laws.
Joint tenancy with the right of survivorship is governed by state law, so it's important to check your state's laws to ensure that this type of ownership is allowed and to understand the specific requirements.
Choose the property.
Joint tenancy with the right of survivorship can be used for real estate, bank accounts, vehicles, and other types of property. Decide which property you want to own jointly.
Identify all the co-owners.
Before anyone owns anything, you need to name the participants. Joint title holders can be a spouse, a family member, or a business partner.
Create a joint tenancy agreement.
The joint tenancy agreement is a legal document that outlines the rights and responsibilities of the co-owners. It should include the names of the co-owners, a description of the property, and a statement that the ownership is joint tenancy with the right of survivorship.
Sign the joint tenancy agreement.
All co-owners must sign the joint tenancy agreement in the presence of a notary public or other authorized official.
Record the joint tenancy agreement.
Depending on the type of property, you may need to record the joint tenancy agreement with the appropriate state agency. For example, for real estate, you will need to record the agreement with the county clerk's office.
Note: It's important to consult with an attorney or a financial advisor to ensure that joint tenancy with the right of survivorship is the best option for your situation and to ensure that the joint tenancy agreement is drafted correctly and in accordance with state law.
How Long Does the Application Process Take?
The application process for joint tenancy with the right of survivorship can vary depending on the type of property and the state in which you live. In some cases, applying can be relatively simple and should take a matter of days, while in other cases, it may take several weeks or even months.
For example, if you are applying for joint tenancy with the right of survivorship for a bank account, the process may be as simple as filling out a form at the bank and having all owners sign it. This process typically takes a few days.
On the other hand, if you are applying for joint tenancy with the right of survivorship for real estate, the process may be more involved. You will need to prepare and record a deed that reflects the joint tenancy with the right of survivorship ownership, and this can involve legal and title work, which can take several weeks or more.
The timeline for the application also depends on how quickly all parties can provide the necessary information and documents and whether any unforeseen issues arise during the process. It's always a good idea to consult with an attorney or a financial advisor to get a better idea of how long the application process may take in your situation.
Final Thoughts on Joint Tenancy With Right of Survivorship
In our line of work (finding people great mortgages so they can buy a new home or refinance their current mortgage), we hear about joint tenancy with the right of survivorship most often in a particular case; that is, a parent is downsizing and buys the next home while splitting the title among one or more adult offspring. Joint tenancy with right of survivorship ensures that the home passes from one generation to the next seamlessly and without probate.Get Free Quotes