A large part of Estate Planning is determining which assets are jointly-held. For example, you must ascertain how assets are held and if they qualify 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. Others become part of the probate estate. Thus, they are subject to claims of creditors, administration, and distribution.
Brief overview of the forms of ownership
The first step is to classify property as 1) tenancy in common; 2) joint tenancy; or 3) tenancy by the entireties.
Tenancy in Common
To qualify for this form of ownership, there should be an “absence of intent” that when one co-tenant dies, the interest automatically passed to the other co-tenant. As opposed to the heirs, for instance.
Each tenant owns an undivided interest. He/she would be entitled to possession of the whole property. This “unity of possession” is the only distinguishing feature of an estate in common.
A joint tenancy is created when there is an EXPRESS provision for the right of survivorship (except with respect to multiple-party deposit accounts). Four unities are necessary:
- Possession. Each joint tenant entitled to possession, joint ownership and control of the property.
- Interest. The interests of each must be identical.
- Title. The interest of each must have originated from the same conveyance or instrument.
- Time. The interest of each must have commenced simultaneously.
On the death of the joint tenant, the deceased tenant’s undivided fractional interest AUTOMATICALLY passes to the surviving tenant by operation of law.
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 four unities of joint tenancy must be present as well as a fifth–unity of the person (thus, 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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