Joint Tenancy with Right of Survivorship: Evaluating the Benefits and Limitations

 Posted on May 19,2023 in Estate Planning

A joint tenancy with right of survivorship is a legal arrangement in which two or more people own an asset together. Married couples often set up joint tenancy for their homes, bank accounts, and other high-value assets. Family members or business partners may also set up a joint tenancy together. This arrangement allows for the smooth transition of ownership rights upon one of the owner’s deaths. However, this arrangement also has its limitations. Read on to learn more.

Advantages of Setting up a Joint Tenancy with Right of Survivorship

Establishing a joint tenancy with right of survivorship (JTWROS) can be a great way to lessen the complexity and stress associated with asset transfers upon a person’s death. 

In a JTWROS, two people (tenants) co-own property together. When one of the owners dies, his or her ownership stake passes to the surviving co-owner. The surviving owner essentially inherits the deceased person’s share without it being specified in the deceased person’s will.

Assets held in joint tenancy do not have to go through the probate process upon the first owner’s death. The surviving owner will not have to wait for the probate process to finish before gaining access to the asset. This eliminates a significant amount of time, expense, and frustration.

Furthermore, handling a recently deceased person’s affairs can be quite expensive. A JTWROS can be used to ensure that a surviving family member has access to your bank account upon your death so they can cover these expenses. JTWROS is also frequently used for real estate or family businesses.

Limitations of a Joint Tenant with Right of Survivorship

JTWROS offers many advantages, but it is not the best option for every scenario. While the arrangement avoids probate when the first owner dies, an asset held in joint tenancy can get held up in probate if both owners die at the same time. For example, if a tragic car accident occurs and both owners of a real estate property pass away, the property may need to go through probate before the asset is passed to the next of kin.

Furthermore, JTWROS only transfers an asset from one owner to the other. This legal instrument does not allow a surviving owner to pass an asset to beneficiaries.

Another potential issue is the risk of conflict between the joint tenants. For example, if one owner wishes to sell the other property, he must get all of the other owners to agree before the sale can occur. 

Problems can also arise when one of the tenants has significant debt, files for bankruptcy, or is sued. A creditor or judgment may force the same of a property held in joint tenancy, which unfairly impacts the other joint tenants. 

Contact our Fort Worth Estate Planning Attorneys

There are many advantages to joint tenancy with right of survivorship, but this arrangement may not be as beneficial as a trust or other estate planning instrument. Let our knowledgeable Fort Worth estate planning lawyers help you evaluate all of your options and determine the best way to meet your unique needs. Call 817-349-7330 for a free initial consultation.

Source: 

https://www.investopedia.com/terms/j/joint-tenancy.asp