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Introduction
Many people own property in "joint tenancy" with another person or persons, usually their spouse, a relative, or in some cases, a business associate. It can be a convenient method of ownership and usually allows for the easy transfer of property upon the death of one of the joint tenants. However, holding property in joint tenancy does not necessarily eliminate the need for court proceedings when one joint tenants dies, and not a substitute for a will. In addition, when the second joint tenant passes away, the property that was formerly held in joint tenancy has become the separate property of the deceased person. Because no one knows which joint tenant will pass away earlier, joint tenancy is not a substitute for a will.
Contents
How should the names be written on legal documents?
Joint tenancy is a way in which two or more persons may hold title to property in equal, undivided shares. When one owner dies, his or her share of the property is not passed on according to a will, but automatically becomes the property of the surviving joint tenant(s). The last survivor becomes the sole owner of the property and can dispose of it as he or she wishes. Example: Three brothers ("Tom", "Dick" and "Harry") own land in joint tenancy. Tom dies, and his share passes equally to Dick and Harry, not to Tom's wife, children brother heirs. When Dick dies, Harry owns the land entirely. He may sell it leave it to his children or other persons of his choice, give it to charity, or do as he wishes with it. The heirs of Tom and Dick would have no claim to the land. This example assumes after Tom's death. Dick and Harry continue their joint tenancy relationship. However, they would also have the option of severing the joint tenancy and establishing another method of ownership which would enable each brother to leave his share to his own heirs. What forms of property can be held in joint tenancy? Practically any kind of property can be held in some form of "survivorship" (so called because it establishes the survivor as the owner of the property). The most common forms are real estate, motor vehicles and securities which are held in joint tenancy, and checking or savings accounts or government bonds which are registered in co-ownership. While it is possible for tangible property such as grain or inventories to be owned in survivorship, such ownership can be difficult to prove if there is no evidence of a title, such as a deed or a bill of sale.
On legal documents establishing a Joint tenancy the names of the owners should be connected with the word "and." The names should be followed with the words "as joint tenants and not as tenants in common." For example, a husband and wife might own a home for which the title reads, "John Doe and Jane Doe, as joint tenants and not as tenants in common."
If you have jointly owned property for which the title or record of ownership is worded differently, it may still be legally acceptable. but you may want to review it with your lawyer to be certain. Are all survivorships written in the same form? Not necessarily. Federal rules state government bonds registered "one or another" cause the survivor to own the bond. State law provides certain bank, savings or industrial accounts registered "one or another" or registered "one and/or another" cause the survivor to own the account.
Some types of accounts also use the words, "with right of survivorship" after the names of the owners, and these accounts also pass to the survivor upon the death of the first owner. These other forms of survivorship may not be true joint tenancies, but if they are properly created they enable the last survivor to own all of the property.
When two or more people own property as "tenants in common," each is the sole owner of his or her share of the property. Upon one owners death, the property is a part of his or her estate and can be passed on by will. or under state law if there is no will. For example, a man and his' son may own land as tenants in common. If the father should die, he could leave his half of the land to his widow, another child, he son who owns the other half, or any other person of his choice. Tenancy in common does not establish a survivorship interest as joint tenancy does. Could one joint tenant dispose of part or all of the property without the knowledge or consent of the other? Each joint tenant has full access to jointly owned bank accounts held in joint tenancy, and could withdraw all funds from the account without the knowledge or authorization of the other.
With regard to real estate, however, one joint tenant would have the right to sell his or her interest in jointly owned property, but could not provide the buyer with good title to the entire property. Such a sale, without the joinder (legal agreement) of the other joint tenants(s), might be impractical to consider for several reasons. Such a sale would have the effect of severing the joint tenancy and converting it to a tenancy in common. The buyer therefore would become at tenant in common with the remaining joint tenant(s) which could give rise to disputes concerning their respective rights and obligations.
A POD (payable on death) account is the property of and is payable to one person during his or her lifetime, and to one or more POD payees upon that person's death. Or, it may be payable to more than one person during their life-times and then payable to one or more payees upon the death of all of the owners. Example: James wants to provide cash support. to his nephew, Charles after his death but doesn't want Charles to have access to any of his funds while he (James) is still alive. He establishes a POD account naming Charles as the payee. During James' lifetime. he has complete access to the money and upon his death, the account is payable on request to Charles. Can a survivorship interest pass by will? No. If property is owned so the last survivor becomes the owner upon the death of the other owner(s), the most carefully prepared will or estate plan cannot affect that right of ownership. Only the last survivor may dispose of the property by will.
A will can be changed or revoked at any time and as often as you wish, as long as you remain competent. A will does not become final until your death. Changes might be advisable in case of marriage, birth or death of a beneficiary, a change regarding your personal representative or the guardian of your children, or the purchase or sale of a business or other property. In the event of divorce, the will is automatically revoked as to the former spouse, unless the will expressly provides otherwise. A decree of separation, which does not terminate the legal status of husband and wife, does not automatically revoke a will.
Whether to continue to hold property presently owned in some form of survivorship, or to acquire additional property in that form of ownership, requires careful study based on your individual circumstances. Changes in tax laws, property laws and property values, as well as many other factors, affect such decisions.
Joint tenancy and other survivorship interests involve serious consequences. You and your lawyer should review any existing survivorship arrangements regularly, and consider carefully any such future arrangements. Remember, joint tenancy is not a substitute for a carefully prepared estate plan.
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