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Marlene Cooper Law

Problems Created by the “Right of Survivorship”

In my practice I am confronted on a regular basis by a common problem – the use of joint tenancy deeds to create joint interests in real estate without a full understanding of the impact of joint tenancy. Joint tenancy, by legal definition, carries with it the right of survivorship so that only the heirs of the last person to die have a claim to the property. Many people are not aware of a viable alternative — holding property as tenants in common. By holding property as tenants in common, each co-owner can leave his or her share to whomever he or she wishes. Also, for tenants in common, the shares do not have to be equal. The following illustrates the difference between the two types of property title.

Let’s assume a house is owned by three sisters (Mary, Martha, and Marie). Under joint tenancy, the sisters all have an equal interest in the house. When one sister dies, she loses all of her interest in the house and it automatically passes to the two remaining sisters. Even if that sister had prepared a will or a living trust naming someone else as the beneficiary of her share, it cannot override the joint tenancy designation on the deed. Likewise, the second sister to die cannot leave her interest in the house to her heirs. When she dies, it will automatically go to the last sister. Only the last sister to die will control the final disposition of the property. The children of the two sisters that died first have no claim to the property.

If you are on title to property as a joint tenant, there are ways you can break the joint tenancy and convert the ownership to tenancy in common. This way you can avoid the harsh consequences of the right of survivorship inherent in joint tenancy. If the sisters in the above example held the property as tenants in common, all three of the sisters would be able to leave their interest in the house to their respective heirs. When the first sister dies, her heirs will take her share. This goes for the other two sisters as well.

When property is held jointly with another as a tenant in common, that partial ownership interest can be placed in a living trust to avoid probate. Consider this example: Mary, Martha and Marie are given a house as tenants in common. Each sister owns one third of the property in her own right. Mary dies but her share of the property is not in a living trust. Her heirs will have to go to probate court to have her share of the property changed into their names even if she leaves a will. Assume the house is worth $300,000 and her one-third share is valued at $100,000. Approximate probate charges on the one-third interest in the property will be $9,000! If Mary had a living trust, there would be no need for probate.

Are you sure that the manner in which you, your parents and other relatives hold property is the best way for all concerned? If tenancy in common is the appropriate manner to hold the property, the next question is whether a living trust has been prepared so that the property can pass free and clear of unnecessary probate costs.© 2014 by Marlene S. Cooper. All rights reserved.

Marlene Cooper Law