Understanding how to hold title to real property is key for protecting your assets. Joint tenancy with right of survivorship (JTWROS) is one way for two or more people to share ownership of a property while avoiding probate. This article will explain what JTWROS is, how it works, and when it makes sense to use it.
We’ll cover questions like: What happens when a joint tenant dies? Can creditors take a jointly held property? Is JTWROS good for married couples? Read on for answers. With proper planning, joint tenancy can be a useful way to manage real estate ownership and transfer property to heirs without court intervention.
What Exactly is a Joint Tenancy with Right of Survivorship?
A joint tenancy with right of survivorship (JTWROS) is a way for two or more people to hold title to an asset, like a house or land. Under a JTWROS, joint tenants each possess an equal, undivided ownership interest in the entire property. The key feature of this form of ownership is the right of survivorship.
When one owner dies, their interest automatically transfers to the surviving joint tenant(s). This avoids the asset going through probate court—the legal process for distributing property after someone dies. In other words, the last living joint tenant ends up owning the entire property when the other tenant(s) pass away.
The right of survivorship defines how JTWROS differs from other forms of shared ownership, like tenancy in common. The survivorship right is what makes JTWROS useful for estate planning purposes.
How Does Joint Tenancy with Right of Survivorship Work?
In a joint tenancy with the right of survivorship, all co-owners share equal ownership of the property and have an undivided interest in the whole property. This means no single owner can decide to sell the property or transfer their interest without the consent of the other owners.
Some key features of JTWROS agreements:
- Right of Survivorship – This is the critical element. If one owner dies, their interest automatically passes on to the surviving owner(s). The deceased owner’s share does not go through probate or get willed to their heirs.
- Unity of Time – All co-owners must receive their interest in the property at the same time via the same deed or will.
- Unity of Title – All co-owners have the exact same type of ownership interest.
- Unity of Possession – All co-owners have an equal right to use and possess the entire property.
In Florida, JTWROS is commonly used by married couples buying property together. The surviving spouse automatically receives full ownership in the event of one spouse’s death. JTWROS avoids probate for the deceased spouse’s share.
JTWROS can also be used by unmarried co-owners like friends, siblings, or business partners. Survivorship rights work the same way. If one owner dies, their interest passes to the other owner(s).
Advantages of a Joint Tenancy with Survivorship Rights
There are several benefits that make JTWROS a popular way to co-own real estate:
- Avoid Probate – Assets held in JTWROS pass directly to surviving owners and avoid the often lengthy and expensive probate process.
- Uninterrupted Ownership – Surviving owners continue owning the property without interruption.
- Equal Interest – All co-owners share equal ownership and use of the entire property.
- Automatic Transfer – Deceased owner’s share automatically transfers to survivors.
- Difficult to Sever – Unilateral severance of JTWROS is very difficult without the agreement of all co-owners.
Drawbacks of JTWROS
Some potential disadvantages to joint tenancy to consider:
- No control over transfer – Deceased owner cannot will their share to heirs. Their interest must transfer to the surviving owner(s).
- Shared financial liability – All owners are jointly responsible for expenses like mortgage payments and property taxes.
- Potential gift tax issues – If co-owners are not married, the transfer of interest after death may be deemed a gift by the IRS.
- Difficult to sever – Voluntarily severing JTWROS requires agreement by all co-owners. Failing relationships between co-owners can make this difficult.
- Homestead protection limitations – JTWROS co-owners may get limited homestead tax exemption benefits compared to married couples in Florida. Consult an attorney.
Alternatives to Joint Tenancy with Right of Survivorship
While JTWROS is common, there are other ways multiple people can hold ownership of Florida real estate:
- Tenants in Common: Tenants in common allows for unequal shares of ownership – one co-owner can own 25% while another owns 75%. Owners can also transfer interest. There are no automatic survivorship rights.
- Tenancy by the Entirety: Only available to married couples in Florida. It provides the right of survivorship along with creditor protections and homestead benefits.
- Community Property: Only in select states. All property acquired during a marriage is co-owned equally. Allows survivorship rights or ability to will interest.
Severing a Joint Tenancy with Right of Survivorship
Ending a JTWROS requires legal action like:
- One owner selling their interest to another owner
- All owners mutually agreeing to sever the joint tenancy
- One owner suing for “partition” to forcefully split the property
Unilateral severance is very difficult. Consult an estate planning attorney before attempting to break a JTWROS.
Tax Considerations with JTWROS
The tax implications of JTWROS vary depending on if the co-owners are married or not.
For married couples, capital gains taxes may be owed if the surviving spouse sells after inheriting sole ownership. But the couple may qualify for capital gains exclusion on sale of a primary residence.
For unmarried co-owners, the deceased owner’s share transferred to survivors may be subject to gift tax. Consult a tax professional.
How to Create a Joint Tenancy with Right of Survivorship
JTWROS is created when co-owners acquire equal interests in a Florida property via the same deed document. Key steps:
- Co-owners agree to shared ownership with survivorship rights
- A Florida real estate attorney prepares the deed
- Deed specifies JTWROS vesting
- All co-owners sign and record the deed
To change an existing property to JTWROS, a new deed must be prepared and recorded. All owners must consent.
Deciding Between Joint Tenancy vs. Tenants in Common
Choosing between JTWROS and tenants in common depends on your goals:
- JTWROS is best for co-owners who want survivorship rights, equal interests, unified control, and avoiding probate.
- Tenants in common allows unequal interests, control over transferring interests, and avoids some tax issues.
Married couples frequently prefer JTWROS for its simplicity and probate avoidance. Unmarried co-owners sometimes opt for tenants in common to allow the transferring of interests.
Using JTWROS for Real Estate Ownership
Joint tenancy with the right of survivorship is commonly used for real estate ownership between spouses and unmarried partners. It ensures the property automatically transfers to the surviving partner and avoids probate.
However, JTWROS also comes with risks:
- Joint liability for debts/lawsuits – Creditors can pursue any joint tenant for debts against the property.
- No control over transfer upon death – Your share of property transfers to co-owners, not your chosen heirs.
- Difficult to sever – Ending JTWROS requires legal filings and the consent of co-owners.
For these reasons, some opt for tenancy in common or other ownership structures for certain real estate assets. Consulting an experienced real estate or estate planning attorney can help you fully understand the implications.
Consulting a Florida Attorney
The attorneys at Stivers Law in Coral Gables have extensive experience with joint tenancy with the right of survivorship and other real estate ownership structures in Florida. We can help you determine if JTWROS is the right approach for your needs and goals.