What is Joint Tenancy?
A legal structure in which two or more persons own a property together, each with equal rights and liabilities, is referred to as “joint tenancy.” Married and unmarried couples, acquaintances, family, and business associates can all form joint tenancies.
This legal relationship creates a right of survivorship, which means that if one of the owners dies, their interest in the property is passed on to the remaining party(s) without the need for probate or the court system.
Joint Tenancy Definition
Joint tenancy, also known as joint tenancy with right of survivorship (JTWROS), is a type of concurrent estate in which co-owners have a right of survivorship, which means that if one owner dies, the property’s interest will pass to the surviving owner or owners by operation of law, avoiding probate. The deceased owner’s stake in the property simply vanishes, and his or her heirs are unable to inherit it. Under this type of ownership, the property is owned entirely by the last living owner, and it becomes part of their estate upon their death. Unlike tenancy in common, when co-owners may have uneven rights in a property, joint co-owners own the property equally.
How does Joint Tenancy Work?
The term “joint tenancy” refers to a type of property ownership that is commonly linked with real estate. A deed is formed when two or more parties come together at the same moment to make a legally binding agreement with one another. These individuals could be family members, friends, or even business associates.
This is a frequent type of ownership between spouses, parents and children, and in any other case where parties wish ownership to pass to the survivor quickly and automatically. The abbreviation JTWROS is typically applied to the account name for bank and brokerage accounts kept in this manner as evidence of the owners’ desire.
Joint Tenancy Pros and Cons
- When a person dies, their will usually goes through probate, which is a legal process in which the courts review and validate the will. When a person dies, their assets are typically unavailable to the survivor until probate is completed.
- If a person does not identify beneficiaries or does not have a will, the probate process can help establish how their assets are dispersed. However, the procedure can take months to complete. Probate and the lengthy legal process are avoided with a joint tenancy.
- In addition to sharing the property’s benefits, all parties in a joint tenancy are equally responsible for it. The joint tenancy covers all of the assets as well as the debts, which means that if the property is financed, both parties are accountable for the debt.
- A shared tenancy can be complicated by divorce or marital troubles. 3 As previously indicated, both partners are responsible for all debts, and neither can sell jointly owned assets without the approval of the other.
- Divorce or marital problems might make a shared tenancy difficult. 3 As previously stated, both spouses are jointly accountable for any obligations, and neither can sell jointly owned assets without the other’s permission.
Joint Tenancy Summary
The term “joint tenancy” refers to a type of property ownership that is commonly linked with real estate. In a shared tenancy, each person has an equal stake in the property, including both financial obligations and potential advantages. The agreement establishes a right of survivorship for all parties involved.
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Last Updated on 05/25/2022 by Mark Does
Financial Consultant and Author