Jointly owned property may avoid probate.
When more than one person has concurrent ownership of an asset, it is considered jointly owned.
Some couples choose to combine all of their assets when married.
Others decide to keep all or some assets separate.
According to a recent TBR News Media article titled “Everything you need to know about jointly owned property and wills,” individually owned assets are governed by a last will and testament while most joint property is not.
Rather than passing through probate for distribution, the assets often pass directly to a surviving owner after the death of an owner.
One of the most common types of assets to be held jointly is real estate.
State laws and types of joint ownership tend to govern exactly how jointly owned assets are handled after the death of one owner.
What are these differences?
Joint Tenancy or Joint Tenancy with Rights of Survivorship (JTWROS).
After the death of one owner, the share of the deceased individual passes directly to the surviving owner.
In this case, probate is avoided entirely for the asset.
Tenancy by the Entirety (TBE).
Not all states recognize tenancy by the entirety.
In the states where it is recognized, like Missouri, TBE is only available for married couples.
In addition to direct inheritance and probate avoidance, Tenancy by the Entirety has other benefits.
While both spouses are living, one spouse cannot sell or mortgage the property without the permission of the other spouse.
Additionally, creditors cannot enforce a judgment against or place a lien on property jointly owned through Tenants by the Entirety, if only one spouse is the subject of the action.
For example, one spouse is driving the family auto and causes an traffic accident.
Tenancy in Common.
Tenancy in Common does not automatically grant rights to the surviving owner.
Instead, each individual owns a share in the property.
The shares do not have to be equal.
The owner who dies first can designate beneficiaries to inherit his or her portion.
This can be through probate using a last will and testament or directly via a transfer on death deed (in states where recognized) or a revocable living trust.
The new beneficiaries will become co-owners with the person or people who jointly owned the property with the decedent.
Transferring property ownership while living by gift or at death can have capital gains consequences.
Those with jointly owner property should work with an experienced estate planning attorney to include the asset within their comprehensive estate plan.
Reference: TBR News Media (Dec. 27, 2022) “Everything you need to know about jointly owned property and wills”