If you are interested in buying properties, you must be aware of what a Joint Tenancy is. In case you have not, you are at the exact right place.
As the term suggests, a joint tenancy with the right of survivorship is a legal arrangement where the ownership structure involves two or more parties. They share their ownership rights over a financial account or any other asset.
When one co-owner dies, their part of the asset passes to the surviving co-owner.
Every tenant has equal rights to the account’s assets. And they are provided survivorship rights on the demise of one account holder(s). The member still alive will inherit the entire property share upon the demise of the other member in the arrangement.
Points To Remember
- A joint tenancy with right of survivorship is a type of legal arrangement where more than one hold ownership over a single account or asset.
- The tenants exercise equal rights to the account’s assets and are provided with survivorship rights upon the account holder’s demise.
- The surviving member is to inherit the entire value of the other member’s property share upon their demise.
- The JTWROS can only be exercised when the property has been acquired by the owners at the same time, provided with the same title on the assets, own equal shares of the property, and must have the same rights of possession for the entirety of the assets.
- Although this arrangement avoids probate, it does not allow the ownership to be passed down to the deceased member’s heirs.
Requirements For A Joint Tenancy With Right Of Survivorship
Creating a JTWROS demands that the owners share the four unities:
- The potential co-owners must acquire the assets at the same time.
- The potential co-owners must all have the same title on the said assets.
- Despite paying different amounts on the said assets, each member is liable to hold equal shares of the total assets. The division of the assets must be 1/n, where ‘n’ is the number of owners.
- All the potential owners must have equal rights to possess the whole of the assets.
You may not be able to create a JTWROS if you fail to establish any of these four entities.
When the joint tenancy with right of survivorship must be created in absolutely transparent language. For example, “Mr. A and Mr. B are to be designated in a joint tenancy with rights of survivorship, and not in a tenancy in common.”
Mentioning this is necessary as in multiple jurisdictions; a tenancy is automatically considered as a tenancy in common.
Study Of A Joint Tenancy With Right Of Survivorship
Contrary to what many may claim, joint tenancy with right of survivorship has no connection with a lease or a tenant in a rental. It applies to a legal concept where two or more individuals share joint ownership over the accounts, assets, or other types of properties.
In simple terms, it can be termed as a form of co-tenancy, and hence it is called a joint tenancy.
A concept in property law, joint tenancy describes the variant ways in which a single piece of property or asset can be owned by two or more individuals at the same given time. JTWROS is one among the many versions of a joint tenancy that give the joint owners equal rights to the property, alongside the right of survivorship. Upon the death of one owner, the entirety of their property passes on to the surviving owner.
This concept of partnership is more common between married couples or between parents and children. However, a JTWROS can also be established between unrelated parties.
Below are the types of assets that may be included in a joint tenancy:
- Real Estate
- Mutual Funds
- Checking Or Savings Account
- Brokerage Fund Accounts
This relationship can, however, be broken if one or more involved parties sell off their interest in the asset to another individual, in case it becomes a tenancy in common, which is a less restricting version of joint ownership.
Advantages And Disadvantages Of A Joint Tenancy With Right Of Survivorship
However, there are multiple advantages of getting into JTWROS, and there are certain drawbacks that come attached with it as well. I will be mentioning both the advantages and disadvantages that will help you have a better understanding of this co-ownership arrangement.
Advantages
Being in a JTWROS helps you avoid probate. A probate is a legal procedure where an individual’s will is proven in court, and only then is it accepted to be a legal document.
After the establishment of a JTWROS, the deceased’s heirs will have no rights over the property. This implies the last living tenant of the property will end up owning all of the assets.
Not just probate, survivorship also allows for the remaining parties to get access to multiple other benefits. The surviving members may keep on using the assets without facing any interference from any of the deceased party’s heirs.
In addition to holding an equal share and equal access, a joint tenancy with the right of survivorship also requires individual parties to make equal contributions toward the property.
This means bills like property tax, repairs, or maintenance must be shared equally, which takes down the burden from any one individual and spreads it equally amongst all.
Disadvantages
An obvious disadvantage is that the individuals associated with a JTWROS cannot pass or will ownership to their heirs. If you own a property and do not wish to give the survivorship rights to other owners, then a joint tenancy with the right of survivorship is not the right type of ownership for you.
You must ensure a strong and solid relationship between all the owners before getting into a JTWROS agreement. The agreement will be impacted if the relationship between parties goes south.
Every individual must be sure that they can afford the said assets before they get into a JTWROS agreement. Financial drawbacks can hinder the agreement, especially when one of the members is doing their part.
Wrapping Up
Single ownership of a property may be stressful and straining on your financial health. Entering into agreements as such may take down a lot of pressure.
However, agreements as such may also have their own drawbacks; hence you must always be fully aware of their advantages and drawbacks before you get into a legal agreement as such. Any route you decide to take, make sure you first consult a financial advisor, as they will help you to properly route the entire process with utmost transparency.
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