Owning a home — or another type of property — with another person comes with all sorts of complications attached. Along with figuring out who’s responsible for the dishes or how to agree on what color to paint the bathroom, you also have to discern who owns what.
That’s where joint tenancy comes in. Joint tenancy means that both (or all) parties have 100% ownership in a home (or other kind property, like a bank account), rather than each owning a 50% share. Right of survivorship means that, if one of the owners passes away, the other(s) will automatically assume full ownership of the property.
Let’s take a closer look at joint tenancy with right of survivorship, or JTWROS, as well as listing some specific examples so you can see exactly how it works in action.
What Is a Joint Tenant With Right of Survivorship (JTWROS)?
Joint tenancy with right of survivorship is — as mentioned — co-ownership in an asset like a home or bank account with assumed ownership after one party’s death. So a joint tenant with right of survivorship is any one person in that ownership relationship.
With JTWROS, two or more people jointly own an entire asset — rather than each owning some proportional measure of the asset’s value.
Requirements for Joint Tenancy With Right of Survivorship
In order to establish joint tenancy with right of survivorship, all parties involved must meet four criteria known as the “four unities” of joint tenancy. They must have:
• acquired the asset at the same time
• obtained the same title document
• an equal share of interest in the property
• equally exercised their right to ownership of the property
Keep in mind that specific laws around JTWROS vary by state, so to fully understand how it works where you live, you’ll need to look up your own state’s laws. For example, in California, the default state is for co-owners of property to be tenants in common — which is a different type of ownership structure (more on that below). You should always look up your own local laws, or speak to a local legal expert, in order to ensure you fully understand your ownership rights.
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Understanding Joint Tenancy With Right of Survivorship: Examples
Definitions are all well and good — but how does JTWROS work in practice?
One of the most common examples of joint tenancy with right of survivorship is when a married couple purchases a home together. Say Rebecca and Jane buy their first home as young newlyweds, preparing to build a family and a life together.
If both Rebecca and Jane meet the four unities of joint tenancy — including purchasing the home together and having both of their names on the home’s deed — they can share 100% ownership of the home, rather than each of them laying claim to 50% of the home’s value. That means that, if either one of them were to pass away, the other would immediately assume full ownership of the home rather than having to go through the process of probate. (Of course, it also means that neither Rebecca nor Jane could choose to leave the home to someone else — including their children — without first terminating the joint tenancy.)
You could also choose to enter into a joint tenancy with right of survivorship with a non-spouse. Say you and two friends choose to purchase a condo in Seattle together, which you plan to rotate between you as a vacation home. So long as you meet the four unities and specify it at the time of purchase, you can all share 100% ownership of the condo. That said, none of you would be able to leave the condo to your children in your will, sell your share of the property, or even specify what proportion of the property value you own. In order to do any of that, you’d need to be in a tenancy in common. So as you’re thinking about a home mortgage loan, a down payment, and other details around a home purchase, it’s important to think about how you want ownership expressed on the deed as well.
Other Examples of Joint Tenancy With Right of Survivorship (JTWROS)
Although we’ve been talking primarily about homeownership in this article, keep in mind that joint tenancy with right of survivorship can apply to other sorts of ownership and property, too. For example, a married couple or pair of business partners might hold a bank account in joint tenancy with right of survivorship. The same may hold true of personal property, such as a vehicle, when purchased jointly.
Different Types of Joint Tenancy
In order to fully understand joint tenancy, you have to understand tenancy in common — which is the primary alternate ownership structure.
Tenancy-in-common allows mutual owners to designate proportional ownership (rather than sharing 100% ownership), and any tenant can sell their portion of the property whenever they choose. In addition, the right of survivorship clause does not hold, and each tenant-in-common can leave their share of ownership to a beneficiary in their will if they so choose.
| Joint Tenancy with Right of Survivorship | Tenants-in-Common |
|---|---|
| Each tenant enjoys full ownership of the shared property. | Tenants may designate proportional ownership: 50/50, 60/40, etc. |
| If one tenant dies, full ownership is automatically bestowed on the surviving tenant(s). | If one tenant dies, they can will their share of the property’s ownership to anyone they want. |
| The four unities must be met in order for joint tenancy to be established. | Tenancy in common can be established without meeting the four unities. |
What are the Tax Implications of JTWROS?
Part of the reason some people choose to enter into a joint tenancy with right of survivorship is to avoid probate — the lengthy, and often costly, legal process by which a person’s assets are assigned to new owners after their death. Still, it’s important for tenants to understand that JTWROS comes with certain tax implications.
For example, if your joint tenant is not your spouse, and the value of your shared property is higher than the annual gift tax exclusion ($17,000 in 2023), the transferal of ownership at the time of their death could trigger the federal gift tax. You may also be subject to estate taxes if the value of your shared property exceeds the IRS’s threshold for that tax — $12,920,000 in 2023.
Always check with a qualified tax professional to be sure you understand the tax implications of shared property ownership.
Advantages and Disadvantages of JTWROS
As you can see by now, joint tenancy with right of survivorship has both advantages and disadvantages. Here are some of them at a glance.
Benefits of JTWROS
• Right of ownership is automatically transferred at the time of a tenant’s death, avoiding the lengthy probate process and simplifying estate planning for families and married couples.
• All tenants claim equal ownership over the asset, be it a home, bank account, or vehicle.
Drawbacks of JTWROS
• No tenant can choose to leave their share of ownership to an heir in their will.
• Because all tenants share 100% ownership of the property, if one tenant has financial trouble, this trouble affects other tenants even if their finances are in better shape. (For example, if two people share joint tenancy of a vehicle and one falls deeply enough into debt for their car to be repossessed, the other will, obviously, also be unfairly penalized in the process.)
When Does Joint Tenancy With Right of Survivorship Make Sense?
Joint tenancy with right of survivorship can be a great choice for families or married couples whose long-term financial goals and life plans are woven together — and who both have similar financial histories and habits. On the other hand, for those purchasing an asset together in the short term, or in situations where one tenant may have serious debt while another does not, joint tenancy with right of survivorship may not be the best choice.
How to Enter a JTWROS Agreement
Ensuring that a joint purchase is a JTWROS has everything to do with the wording on the asset’s title or deed — so it’s important to ensure that your mortgage lender, bank account representative, or whoever you’re making a purchase from, understands your intention to enter into a joint tenancy with right of survivorship at the time the asset is acquired.
The Takeaway
Joint tenancy with right of survivorship is an ownership structure in which all parties share 100% ownership of an asset such as a home, joint brokerage account, or vehicle. If one of the tenants dies, the ownership is automatically transferred to the other(s), which makes it a common choice for married couples and families.
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FAQ
What is the primary advantage of being a joint tenant with right of survivorship?
One reason married couples and families so frequently choose this ownership structure is that ownership of the property is automatically conferred to the surviving tenant if the other party dies — which avoids the lengthy probate process and doesn’t require anyone to move at a very difficult emotional time.
Which tenancy is best for married couples?
Although every couple is different, many married couples choose a joint tenancy with right of survivorship to simplify their estate planning.
What is a primary feature of property held in joint tenancy?
Property held in joint tenancy is owned 100% by all parties involved — rather than each party owning a proportional share of the property’s value.
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