How you own property matters. Here is a quick explanation of jointly-held assets. First, what are jointly-held assets? When two or more people own property like a home, each person owns a share of the entire property. Thus, they own it together.
Why does it matter how people own property? For one, we want to know what happens to jointly-held assets when someone dies. We especially need to figure out if the property qualifies as probate or non-probate assets. This is because, some properties, on the death of the joint owner, pass immediately to the surviving tenant by operation of law. These pass free of claims of creditors (a good thing!). Others become part of the probate estate. Thus, they are subject to claims of creditors, administration, and distribution (now who wants that?)
Brief overview of the forms of ownership
The first step is to classify property as either: 1) tenancy in common; 2) joint tenancy; or 3) tenancy by the entireties.
Tenancy in Common
In a tenancy in common, each tenant owns a share of the property. The amount of the interest may vary (the owners must not share equal interests) and can be obtained at different times. Tenants in common have NO rights of survivorship UNLESS the deceased owner’s Will specifies that the property should be divided among the surviving owners. Thus, the property belongs to the deceased person’s estate.
Joint tenants must obtain equal shares of the property that they acquired at the same time. The terms of the ownership should be spelled out in the deed.
The major difference between tenancy in common and joint tenancy is that on the death of the joint tenant, the deceased tenant’s interest AUTOMATICALLY passes to the surviving tenant.
Tenancy By The Entireties
In the absence of a contrary expression of intent, a tenancy by the entireties arises in real property whenever an estate vests by gift, purchase or descent in two persons who are then SPOUSES. The law makes spouses one person in law.
Divorce, death or agreement between the spouses will sever this form of ownership. On the death of one spouse, the entire estate goes to the other spouse survivor.
Please refer to an attorney for a more detailed analysis. Learn more about Tenancy by the Entirety here.
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