Joint Tenancy

Joint tenancy is a way to own property (real estate, bank accounts, investments) with one or more people. The key feature: "right of survivorship"—when one owner dies, their share automatically passes to surviving owners, bypassing probate.

Key Characteristics:

1. Equal Ownership: All joint tenants own equal shares. Two owners = 50/50, three owners = 33.3% each. You can't have unequal splits in joint tenancy.

2. Right of Survivorship: When one owner dies, surviving owners automatically inherit their share. No probate court, no will needed. The property passes immediately.

3. Unity of Time: All owners must acquire their interest at the same time (same deed, same transaction).

Common Uses:

Married Couples: Most common for spouses owning homes together. When one spouse dies, the other becomes sole owner automatically.

Bank Accounts: Joint checking/savings accounts—either owner can withdraw, and funds pass to survivor without probate.

Investments: Brokerage accounts held jointly transfer to survivor seamlessly.

Joint Tenancy vs. Tenancy in Common:

Joint Tenancy:

• Equal shares only
• Automatic survivorship
• Can't leave your share via will

Tenancy in Common:

• Unequal shares allowed
• NO survivorship (share goes to heirs via will)
• More flexibility

Tax Implications:

When joint tenant dies:

• 50% of property gets step-up in basis for married couples
• 100% step-up for unmarried joint tenants in some states
• May trigger estate tax if estate is large

Risks:

1. Creditor Exposure: If one owner faces lawsuits/creditors, the entire property could be at risk.

2. Can't Control Distribution: You can't leave your share to someone specific in your will—it goes to surviving joint tenants.

3. Unintended Consequences: Adding a child as joint tenant on your house means they own it NOW, not after you die. Could complicate Medicaid planning.

Breaking Joint Tenancy: Any owner can sever joint tenancy by transferring their share to someone else (or themselves as tenant in common), ending survivorship rights.