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Your Guide to Joint Tenancy with Rights of Survivorship: What You Need to Know

Is joint tenancy with rights of survivorship the right form of ownership for you?


[Updated: Feb 04, 2021] Aug 11, 2020 by Tara Mastroeni
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When you purchase a home with someone else, one of the most important details to consider is how your ownership will be defined on the deed. One option is to be joint tenants with rights of survivorship. Keep reading to learn what joint tenancy with right of survivorship means, the pros and cons of choosing this arrangement, and how you can go about forming joint tenancy with a loved one or business partner.

What is joint tenancy with rights of survivorship?

In real estate, joint tenancy is a type of property ownership arrangement where two or more people own an equal interest in the property at the same time. Joint tenancy with rights of survivorship -- also known as JTWROS in industry parlance -- is a specific type of joint tenancy where, when one property owner passes away, his or her ownership interest in the property is automatically transferred to the surviving co-owner.

Joint tenancy differs from other forms of asset ownership, like tenancy in common. In the latter scenario, for example, each co-owner can own a different percentage of interest in the property. Each co-owner is also entitled to a beneficiary designation of who will take over his or her interest in the property. With the former, each tenant has an equal interest in the property and, usually, the surviving joint tenant automatically inherits ownership rights to the entire property upon the deceased joint tenant's death.

Due to the way joint tenancy with rights of survivorship is structured, it's most common to see this form of asset ownership used between spouses. However, it's worth noting that it is also possible to share this type of ownership interest with a business partner, though it is less common to see business partnerships drawn up this way for real property and more common to see it used for other assets, like a corporate brokerage account, for instance.

How to create joint tenancy with rights of survivorship

Luckily, if you've decided that joint tenancy with rights of survivorship is the right form of ownership for you, creating this estate plan is relatively easy. In most cases, all you have to do is write out the words "joint tenancy with rights of survivorship" on the title document for the property in addition to both of your full names.

However, you'll want to check your state law for specific guidelines on this process. Some states have their own set of rules that need to be followed. In South Carolina, for example, the deed must include the exact phrase, "as joint tenants with rights of survivorship, and not as tenants in common." Meanwhile, in Texas, both parties must sign a formal agreement to that effect. Your best bet is to consult a title officer or real estate attorney to help you figure out the right course of action to take.

By the same token, the way in which you can sever a joint tenancy may also vary by state. However, in general, you can do this by transferring your owner's interest in the property to a third party. The third party and the other co-owner would then hold the title as tenants in common. Alternatively, you could also go to court and ask a judge to partition the property.

What are the advantages of this form of tenancy?

In truth, there are some sizable advantages to choosing joint tenancy with rights of survivorship when it comes time to decide how you will hold title on your property. Read them over before deciding if JTWROS is right for you.

You'll avoid the probate process

Whenever someone dies, a probate court reviews their will with the intent of making sure the will is valid and legally binding. The court's other duty is to distribute any remaining assets to that person's beneficiaries. However, depending on the size of the estate, this process can take months or even years to complete. Choosing to hold an asset as JTWROS allows the surviving co-owner to avoid the probate process entirely.

It will allow for continuity of assets

Along those same lines, when an estate goes to probate, the deceased owner's assets are usually frozen, which means they're unable to be used. Few couples want that to happen to a home they own jointly. Owning the home as joint tenants with rights of survivorship is one way to ensure that your spouse or loved one will still be able to continue to live in the home that you built together even if one of you passes on before the other.

It may have substantial tax benefits

Lastly, choosing to become joint tenants with rights of survivorship may also come with certain tax benefits. For example, in some cases, JTWROS can prevent certain taxes from being imposed, such as the gift tax, which typically occurs when the ownership of property is transferred from one person to another.

What are the disadvantages of this form of tenancy?

That said, there are also some pretty big consequences that come with choosing joint tenancy with survivorship rights, especially if your relationship with your spouse or business partner is not the most solid. Be sure to weigh these disadvantages as you make your final decision on how you intend to share your interest in the property.

You both have equal responsibility for the asset

With JTWROS, both parties share equal responsibility for the home. On one hand, this refers to any necessary maintenance and upkeep on the property. On the other, it also refers to a shared financial responsibility for things like paying the mortgage and any utility bills.

Big decisions require unanimous consent

Since you both own an equal interest in the home as joint tenants with rights of survivorship, any big decisions regarding this asset need to be made together. This means you can't sell the home or take out a loan against it without the other person's consent. While that may not be an issue for most happily married couples, couples in the middle of a divorce situation, for instance, may have a harder time agreeing on the best course of action to take.

Your interest dissolves upon your death

For individuals who want to control what happens to their home after they die, JTWROS may not be the best choice. In this case, after you pass, your ownership interest will be transferred to your spouse or business partner, who will then have an undivided interest in the property. He or she then gets to decide what happens to the property.

The bottom line

Joint tenancy with rights of survivorship can be a useful tool for couples or business partners who are certain that they want each other to have control over the property once one of them ultimately passes on. However, if you're uncertain of how you'd like your estate plan to be structured, choosing to be tenants in common may be a better choice. With that said, take your time weighing all the pros and cons before determining whether this form of ownership is right for both of you.

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