What Are Joint Tenants With Right of Survivorship (JTWROS)?
Joint tenants with the right of survivorship (JTWROS) is a legal structure where two or more parties share ownership of a financial account or another asset. When one of the joint owners dies, their share automatically passes to the surviving co-owner(s).
Each joint tenant has an equal right to the account's assets and is afforded survivorship rights if one of the account holder(s) dies. The surviving member(s) inherit the total value of a deceased member's share upon the death of that other member, regardless of any other will or heirs.
Key Takeaways
- A joint tenant with the right of survivorship is a legal ownership structure involving two or more parties for an account or another asset.
- Each tenant has an equal right to the account's assets and is afforded survivorship rights if the other account holder(s) dies.
- A surviving member inherits the total value of the other member's share of property upon the death of that other member.
- A JTWROS can only be established if the owners acquire the property at the same time, have the same title on the asset(s), have an equal share in the property, must have the same right to possess the entirety of the assets.
- This agreement avoids probate but does not allow ownership to be transferred to a deceased individual's heirs.
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Understanding Joint Tenants With Right of Survivorship (JTWROS)
Contrary to what some people may believe, the term joint tenant with the right of survivorship has nothing to do with being a lessee or tenant in a rental apartment. JTWROS is actually a legal concept that applies to individuals who own assets, accounts, or other types of property. It is actually a form of co-tenancy, which is why this arrangement is also often called a joint tenancy.
Co-tenancy or joint tenancy is a concept in property law that is used to describe the various ways that a piece of property can be owned by two or more people at the same time. A JTWROS is one version of co-tenancy that gives co-owners equal rights to the asset in addition to the right of survivorship. This means that both parties can freely use the asset as they please. But if one tenant dies, their ownership stake passes on to the surviving owner(s).
A JTWROS is most commonly used between married couples, or between a parent and their child. But it can also be established between parties who are not related. As noted above, this type of legal relationship can involve any number of financial accounts or assets, such as:
- Real estate
- Checking, savings accounts
- Mutual funds
- Brokerage fund accounts
This relationship can be broken if one or more of the parties involved sells their interest in the asset to someone else. As such, it becomes a tenancy in common (TIC), which is a less restrictive form of joint ownership.
Inheritance from Joint Tenants with Right of Survivorship
When a joint tenant dies, their rights to the asset automatically pass to the surviving joint tenants, regardless of any other will or directive from the deceased.
Requirements for JTWROS
The creation of a JTWROS requires that the owners share what is known as four unities:
- The would-be co-owners must acquire the assets in question at the same time.
- The would-be co-owners must have the same title on the assets.
- Regardless of the individual amounts that each owner has given or paid for the assets, each owner must have an equal share of the total assets, given as 1/n, where n is the total number of owners.
- The would-be co-owners must each have the same right to possess the entirety of the assets.
A JTWROS cannot be created if any one of these four unities isn't established. The parties are then treated as tenants in common.
The language must be extremely clear when a JTWROS account is created. For instance, "Mr. X and Mrs. Y are to be designated joint tenants with rights of survivorship, and not as tenants in common." This is necessary because a joint tenancy is automatically assumed to mean tenants in common in certain jurisdictions.
All members of a brokerage account are afforded the power to conduct investment transactions within the account.
Joint Tenant With Right of Survivorship (JTWROS) vs. Tenancy in Common (TIC)
A joint tenant with right of survivorship differs from a tenancy in common. While each party in a JTWROS has a right of survivorship over the asset, those in a TIC do not have the same legal right. Unless otherwise indicated, this means when a tenant dies, their ownership stake is passed on to an heir or other beneficiary of their choosing.
While parties in a JTWROS must have an equal stake in the asset or property, tenants in common aren't bound by this rule. Instead, this agreement allows parties to have different stakes in the property. For instance, three people may own a home together. If one individual has a 75% claim in the house, the other two are only able to have a 25% stake in the property.
Unlike a JTWROS, there are several ways for parties to terminate a TIC. They include buying out the other party, selling the asset, and one or more heirs selling their stake.
Creditors with claims against a deceased account owner's assets, including a joint tenant with right of survivorship, may be settled using any of their previously owned assets.
Advantages and Disadvantages of JTWROS
There are a number of benefits to entering into a JTWROS. Despite these advantages, this type of arrangement does come with certain drawbacks. We've listed some of the most common advantages and disadvantages of being a joint tenant with right of survivorship below.
Advantages
Entering into a JTWROS avoids probate, which is the legal process where a person's will is proven in court and accepted to be a valid legal document. The deceased owner's heirs cannot inherit their property once a JTWROS is established. This means that the last living owner of the property owns all of the assets. They then become part of this individual's estate.
Survivorship also provides the remaining party(s) with other benefits in addition to avoiding probate. Surviving parties are allowed to continue using the asset without any interference from outside parties, including a deceased party's heirs.
Each party in a JTWROS must contribute to the property equally, in addition to holding an equal share and equal access to it. This means they must put in an equal share of any bills, such as property taxes, maintenance, or repairs. This takes the burden off one individual and spreads it out between everyone in the relationship.
Disadvantages
The most obvious disadvantage is that individuals can't pass or will their ownership stake to their heirs. Those who want to own property but don't want to give survivorship to the other owner(s) shouldn't consider this kind of agreement.
Everyone should ensure they have a stable and solid relationship before they enter into an agreement like a JTWROS. If relations between parties go south, it can impact the agreement.
Individuals should be sure they can afford the asset before they enter into a JTWROS. Financial strains can put a damper on the agreement, especially when one individual is doing their part. For instance, if one individual can't keep up with their financial obligations to repair a home or make payments on a mortgage, it could have a negative effect on the other party.
Pros
Avoids probate
Allows survivors to use assets without outside interference
Gives each party equal financial responsibility in addition to an equal stake
Cons
Parties can't will their ownership stake to heirs
Relationships can be strained
One party can be negatively impacted if the other doesn't live up to their responsibility
What Is the Difference Between Joint Tenancy With Right of Survivorship and Joint Tenancy?
The primary difference between a joint tenancy with the right of survivorship and a joint tenancy is that the former passes ownership to any surviving parties rather than to their heirs or other beneficiaries. It also avoids probate and gives each party equal access and an equal stake along with equal responsibility for the property.
What Are the Dangers of Joint Tenancy?
Joint tenancy may lead to problems between parties if or when the personal relationship turns sour. It can also negatively impact one party if the other doesn't live up to their financial obligations. And it prevents owners from passing on their stake to someone of their choosing.
Can a Joint Tenancy With Right of Survivorship Sell Their Share?
A joint tenant can sell their share of the asset to someone else. Doing so nullifies the agreement, turning it into a tenancy in common.
Does Right of Survivorship Override a Will?
The right of survivorship does override any wills that are in place. That's because this kind of arrangement avoids probate. But if the last surviving party in a JTWROS dies, the agreement no longer applies, which means the asset or property is included in their will and goes to their heirs.
The Bottom Line
Owning property on your own can put a strain on your finances. But you can lessen the burden by entering into a special agreement with someone else. This agreement is called a joint tenant with the right of survivorship. Not only does it give you and your partner an equal share in the asset, but you also share equal responsibility.
Keep in mind, though, that your share goes to the surviving tenant if you die, which means you can't leave your share to any of your heirs. You may be better off becoming a tenant in common if you want to pass on your stake to someone else. Regardless of what route you take, be sure to consult a financial and/or legal professional to guide you.
Correction—April 26, 2023: The article was amended to reflect that each owner in a JTWROS structure must have an equal share, not a percentage, of the total assets expressed as 1/n, where n is the total number of owners.
