When a person passes away, they usually leave behind a will that states who should receive all the assets they had when they were alive. This is a legal and formal method of determining the recipients and how the assets are to be distributed after someone’s death. In some cases, a Joint Tenancy agreement is in place that allows for these assets to be divided evenly among the recipient or as stated otherwise by the creator of the will. To learn more, visit dhgpl-law.com about how Joint Tenancy applies to you.
- What Is Joint Tenancy?
- Joint Tenancy Arrangements
- Entering a Joint Tenancy Agreement
- Applying the Rights of Survivorship
- What are the benefits of joint tenancy?
- Joint Tenancy Vs. Tenancy In Common
- Are there any downsides to Joint Tenancy?
- Frequently Asked Questions
What Is Joint Tenancy?
Joint Tenancy is a right to ownership where two or more individuals have the right to access and acquire the financial, personal, and real estate assets of the deceased person. This type of agreement is utilized by married and unmarried couples, relatives, next of kin, business partners, and close friends.
Joint Tenancy Arrangements
A variety of different assets can fall into a Joint Tenancy arrangement, such as real estate, personal property, bank accounts, and even businesses. In the case of someone’s will, the selected recipients receive their portion of the deceased person’s assets left behind according to the exact details on the document. In the event of a disagreement or dispute about the distribution of assets, a court judge will give the final verdict based on what is stated in the will.
Real Estate – Joint tenants have shared access and ownership of the deceased individual’s real estate holdings and are equally responsible for any financial obligations.
Personal Property – Pieces of personal property can include cars, jewelry, pieces of art, antiques, and bonds, just to name a few.
Bank and Brokerage Accounts – Financial assets in bank or brokerage accounts are also accessible to joint tenants. Through Joint Tenancy, the recipients have equal rights to the funds in these accounts and can buy or sell securities or stocks on their behalf.
Business Ownership – Since Joint Tenancy is linked to the Right of Survivorship, the death of a business owner automatically appoints the surviving joint tenants with full and dual ownership of the company.
Entering a Joint Tenancy Agreement
When found in a Joint Tenancy Agreement, it is essential to know that this arrangement allows beneficiaries to access the deceased individual’s assets without the need to go to court. As stated in the will, the appointed recipients have equal rights to acquire and access all monetary funds, real estate, and personal property as joint tenants under the rights of survivorship.
Applying the Rights of Survivorship
When a will is evaluated with an accompanying Joint Tenancy Arrangement, the allocation and distribution of assets take priority. Once all assets have been distributed evenly among the recipients or, as stated otherwise in the will, each individual has complete control of their portion of the assets. Since the assets now fall under their ownership, they will be able to sell, buy, or modify them anyway they wish. However, if a co-tenant becomes disabled or passes away, the co-tenant can still access their portion of the assets or according to the provisions as stated in the will. When disagreements or disputes persist in the distribution of assets, hiring a probate lawyer or other professional guidance is recommended.
What are the benefits of joint tenancy?
Joint tenancy is an increasingly popular form of real estate and helps people buy homes they wouldn’t have been able to otherwise. Learn more about joint tenancy and start by understanding the benefits.
It helps in avoiding probate
When someone dies, a probate court will assess the will and decide if the will is valid and legally binding. It also established the value of the liabilities and assets. Once the review is complete and debts are settled, the remainder is shared with the heirs. When the deceased didn’t have a will, the probate court will not have written evidence about distributing the assets which prolongs the process.
With a joint tenancy property, the ownership goes automatically to the remaining spouse/business partner. Therefore, probate is avoided.
Both parties are responsible
When a married couple/two business partners own together with an asset, we use the expression “joint tenants with right of survivorship” (JTWROS). Both individuals enjoy the benefits, share the responsibilities and liabilities. At the same time, none of them will incur a debt on the asset without incurring debt themselves.
What is joint tenancy with survivorship?
Joint tenancy with rights of survivorship refers to an arrangement between owners and details on how the assets will be shared upon death. Joint tenancy with rights of survivorship allows every owner to open a joint account with each owner equally entitled to use the assets. The account holds the deed to the property. When the owner dies, the assets in the account will be shared amongst the remaining owners.
It has continuity
When someone dies, it’s common for the assets to be frozen until the probate courts state if the assets are connected to debts or until it concludes how to distribute the assets. When the surviving partners have outstanding debts or spending, this process can be daunting and consuming.
However, with joint tenancy, the surviving partner will be able to use the property to their likings. They can sell, mortgage, or keep it. The law actually specifies that the ownership goes to the survivor owner when the other owner passes away.
Joint Tenancy Vs. Tenancy In Common
At a glance, joint tenancy and tenancy in common seem to be the same thing. Truth be told, they both are real estate acquisition methods that mean that two or several parties own a real estate asset. When you look into the details, you see that the two concepts are not the same thing.
In common, joint tenancy and tenancy mean that several parties own just one property, but some differences are present. With joint tenancy, every owner has to hold the same amount in interest in the property. As a result, four parties agreeing on a joint tenancy must get a 25% stake in the asset.
However, with a tenancy in common agreement, each party doesn’t need to own the same interest in the property. Two people can have a tenancy in a common deal, with one holding more equitable interest than the other party. Nothing is forcing the two to own the same amount.
The equitable interest is the main difference between the joint tenancy and tenancy in common. With joint tenancy stating that both owners have the same amount of equitable interest, it’s evident that each of them must take the property title when the deed is acquired. On the contrary, with tenancy in common agreements, the flexibility is higher. There’s no need for both owners to be present when receiving the deed. It’s possible to create/amend the tenancy in common at any moment.
The flexibility that comes with the tenancy in the common agreement allows the owners the chance to get out from the deed without breaking the agreement. As the equitable interest doesn’t need to be split evenly between the parties in the tenancy in common agreements, owners can step out of the contract without penalties. With a joint tenancy agreement, though, removing from the agreement is more complicated. It’s pretty challenging when only one of the owners wants to give up. The house will have to be sold that the proceeds are evenly shared with the owners.
At the end of the day, every ownership method has its own rules when the owner dies. If a co-owner dies in an agreement, the equitable interest will go to the deceased’s owner’s estate. With a joint tenancy agreement, though, the equitable interest will go to the surviving owner.
Are there any downsides to Joint Tenancy?
Joint tenancy has relatively strict conditions, even if they protect one from the co-tenant attempts to benefit from the investment. However, strict requirements can have adverse effects.
When the co-owner deals with financial challenges and loses their jobs, the other parties in the agreement will need to cover the mortgage spending and reduce the risk of the property become defaulted.
If the relationship between the owners goes through a rough patch, the joint tenancy may also suffer. Since all parties have to agree on any decision regarding the property, it will be challenging to do it when there are disagreements. For example, no party will sell their share of the property if the other parties don’t give permission. Additionally, due to the survivorship rights, only the last living co-tenants will pass the assets on to their next of kin. Some married couples hold property titles as tenants by the entirety (it’s a title that gives every partner entire interest in the property); teams who hold joint tenancy titles will have challenges in case of divorce. Joint tenancy brings tension to the legal battles. No matter if the marriage dissolves or not, each partner may become responsible for the debts.
Frequently Asked Questions
Is it possible to get out of joint tenancy?
If you’re in a joint tenancy and both want to leave, you or your ex-partner can put an end to the residence by giving notice. Additionally, both of you will have to move out. Should you agree on who gets to stay, you need to explain it to the landlord. He will have to update the tenancy agreement.
Are married couples automatically joint tenants?
Most married couples will hold their property as joint tenants. In such a situation, the property is seen as Tenants in Common. Therefore, each co-owner can leave their share of the property to whoever they want. As Tenants in Common, each co-owner will own a particular percentage of the property.
Can you change from joint tenancy to sole tenancy?
All tenants in joint tenancy will sign an application form to switch from joint to sole tenancy. If you’re a joint tenant, you will need to pay rent and follow the terms of the agreement until your name is no longer in the contract.
What happens is one person intends to sell and the other doesn’t?
You can sell your share if you’re the only one who wants to sell the house. Even if the co-owner may not agree on the sale, you will still be able to sell your share. It’s common for co-owners to sell their share of the property and the right is suspended for the marital home.
Can the will override joint tenancy?
You will need to have a new will if you decide to own the house as tenants in common by severing the joint tenancy. The situation doesn’t apply if you own a property as tenants in common. In such a case, you can name the person who gets your share of the house on your death.
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