Joint Tenants With Right of Survivorship (JTWROS)

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What You Should Know

  • Joint tenants with right of survivorship (JTWROS) automatically transfers the deceased tenant’s share of the property to the surviving tenant
  • JTWROS avoids probate and overrules the deceased’s will
  • Joint tenants will have an equal and undivided interest in the home
  • There are income, estate, inheritance, and gift tax implications for JTWROS

Methods of Holding Property Title

Joint Tenancy with Right of Survivorship (JTWROS)Tenancy in Common (TIC)Community Property/Tenancy By The Entirety (TBE)Sole Ownership
Number of OwnersTwo or moreTwo or moreTwoOne
Division of PropertyUndivided interestDivided ownershipUndivided interestFull ownership
Right of SurvivorshipYesNoYesNo
Conveyancing/TransferYes, reverts to TICYes, separately without consentYes, jointly with consent-

What Is a Joint Tenant With Right of Survivorship?

Joint tenancy is when two or more people own the same property. For example, a couple might decide to purchase a home together and each have an equal interest in the home, split 50/50. Right of survivorship is a legal real estate term that describes the rights that the surviving tenants have should one of the co-owners pass away. Instead of the property going from the deceased joint tenant to their heirs or will, the property will go to the surviving joint tenant directly. Joint tenancy goes hand-in-hand with right of survivorship, and is referred to by the term “Joint tenants with right of survivorship”, or JTWROS.

  • Joint Tenant: Both partners own an equal share of the property. More specifically, both partners own an undivided interest in the property. This means that both partners own the entire property at the same time.
  • Right of Survivorship: Should one of the joint tenants pass away, the death of one of the co-owners means that the surviving co-owner will gain ownership of the entire property. This bypasses the deceased co-owner’s will and estate. The heirs of the deceased co-owner will not get any proceeds from the property. Probate is also avoided.

Does joint tenancy always have right of survivorship?

Joint tenancy does not always have right of survivorship. If there is no right of survivorship, then the term would be “joint tenants in common”, or JTIC. Both JTWROS and JTIC are types of joint ownership, but the difference lies in how their share of the property is handled should one of the co-owners pass away. With joint tenants in common, the deceased partner’s share of the property will go to their estate, with it eventually being distributed through their will. JTWROS skips this step and grants ownership directly to the surviving joint tenant.

How Does Joint Tenants with Right of Survivorship Work?

To enter into a Joint Tenants with Right of Survivorship agreement, the following conditions will need to be met:

  • The co-owners will have an equal share in the property
  • The co-owners acquired their interest in the property at the same time

Joint tenancy with right of survivorship is common for married couples, but they can also be used for partners, family members, or with friends. If you and your partner decide to purchase a home with JTWROS, your property title document will include “Joint Tenants with Right of Survivorship”. This signifies that your title is being held as JTWROS, along with the rights and responsibilities that come with it.

Under JTWROS, the property is being owned simultaneously by both joint tenants. This means that the joint tenants are jointly liable for the property, including financially. For example, with joint tenants with right of survivorship, both co-owners are responsible for the mortgage payments, should they have purchased the home with a joint mortgage loan. If one partner is unable to make their mortgage payments, the other partner can also be responsible for any missed or late mortgage payments. Other costs, such as maintenance and property taxes, are also split equally between the joint tenants.

Joint tenants with right of survivorship also require both partners to agree on matters that will affect the property. For example, both partners will need to agree on adding an encumbrance, such as a new mortgage or HELOC. If one partner disagrees, then one partner cannot unilaterally go ahead without the other partner’s approval. The death of one joint tenant will result in the surviving partner gaining full ownership of the property, should there be no other surviving parties with right of survivorship.

Benefits of Joint Tenants with Right of Survivorship (JTWROS)

The main benefit of JTWROS is being able to avoid the probate process, which would otherwise be a lengthy and costly process. Instead of needing to go through probate and having the share of the property being distributed based on the deceased’s will, JTWROS simply allows the surviving joint tenant to gain full ownership. This makes estate planning simpler and the process will take up less time.

The second benefit of JTWROS is having costs associated with the property being shared with your co-owner. Instead of being fully responsible for mortgage payments, the responsibility is shared with your partner. This shifts some of the burden off of each individual partner, with more shared financial resources to back up your shared property.

Disadvantages of Joint Tenants with Right of Survivorship (JTWROS)

Just as how being joined financially with your partner can be beneficial, in some cases it can work against you. Their financial health, and their ability to afford their mortgage and property expenses, will lie on you if they can’t afford it. Joint tenants work together, which means that they also rely on each other financially. If one joint tenant gets behind on their share of the mortgage payments, then you will need to step in and pay for their share. Defaulting on the mortgage will affect both joint tenants, even if it was one joint tenant that caused the mortgage default. JTWROS also means that you can’t choose someone else as an heir to your property. You won’t be able to have this property on a will to someone else.

  • Avoid probate
  • Split costs with co-owners
  • Ownership is immediately transferred upon death
  • All co-owners are responsible for the mortgage
  • You can’t choose an heir to your share of the property
  • The surviving co-owner can’t avoid probate

Joint Tenancy vs Community Property

Not all states have community property with right of survivorship. Community property is identical to joint tenancy, including having right of survivorship, but the difference is that only married couples can hold a property as community property. Otherwise, a joint tenancy would be used, such as in the case of friends or family members. Property of married couples might even be automatically considered to be community property with right of survivorship. States that do have community property laws include California, Texas, Arizona, Washington, and Nevada.

Joint Tenants With Right of Survivorship (JTWROS) and Taxes

While joint tenancy with right of survivorship lets you skip probate, it doesn’t let you skip taxes. When ownership is transferred to the surviving joint tenant upon the death of one joint tenant, there may be taxes that can apply. There are tax implications to consider for income tax, estate tax, inheritance tax, and gift tax.

Income Tax

JTWROS requires the joint tenants to have an equal share of the property, even if one partner didn’t contribute as much as the other partner towards purchasing the home. For income tax purposes, any income from the property, as well as any possible deductions, would need to be split equally with your partner. This is because JTWROS assumes that this would be shared equally between the joint tenants.

For example, let’s say that Partner A and Partner B decide to purchase a $100,000 home. Partner A contributes $80,000 towards buying the home, while Partner B contributes $20,000. While Partner A contributed 80% of the home’s cost, they will only have a 50% share of the home. When reporting income and deductions on their individual tax return, they will report 50%, with Partner B reporting 50% on their own tax return. If the property was a rental property that earned an income of $10,000, then Partner A will report $5,000 on their income tax return.

The same thing applies for capital gains and depreciation. These are split equally, even if the actual costs or gains aren’t shared equally. Let’s say that for the same example, the home was sold for $200,000, and results in a $100,000 capital gain. When calculating capital gains tax, Partner A will calculate their individual capital gain as $50,000, and Partner B will have an individual capital gain of $50,000.

Estate Tax and Inheritance Tax

You may need to pay inheritance tax on the share that you gain depending on your state and relationship. For example, spouses won’t need to pay inheritance tax, but the transfer will still have estate tax implications down the road. That’s because the basis of the property will be adjusted, or rather, the basis of the deceased’s share of the property, which is now transferred to the surviving joint tenant.

Gift Tax

Gift tax may come into play in cases where the amount is over the annual exclusion amount. This might be due to an equal share of the property being gifted to a non-spouse, such as to a child. It might also occur if one joint tenant is paying for the other joint tenant’s share of the property’s expenses, such as mortgage payments, that combined is more than the annual gift tax exclusion amount.

Joint Tenants With Right of Survivorship (JTWROS) FAQ

What happens if both joint tenants die?

If one joint tenant died first, then the ownership of the property is transferred to the surviving joint tenant. If the surviving joint tenant dies, then their will is used to distribute the property to the joint tenant’s hiers, and will go through the probate process. The property does not get distributed to the heirs of the first joint tenant, as ownership has already been fully transferred to the second joint tenant.

What happens when joint tenants die at the same time?

If both joint tenants die at the same time, then the property will be handled as a joint tenancy in common (JTIC). The ownership of each joint tenant will be distributed based on their individual wills. The property will go through the probate process for each joint tenant.

What happens if a joint tenant sells their share?

Under a joint tenants with right of survivorship agreement, each joint tenant has an undivided interest in the property. One joint tenant cannot sell the home without the other joint tenant agreeing, since they own the entire home as well. If a joint tenant wants to sell their share, then the property will no longer be held as a joint tenancy with right of survivorship. Instead, it will be held as joint tenants in common.

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