What Are Joint Tenants With Right of Survivorship JTWROS
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Contents
- 1 Joint Tenants With Right of Survivorship (JTWROS)
- 1.1 What Is a Joint Tenant With Right of Survivorship (JTWROS)?
- 1.2 Understanding Joint Tenant With Right of Survivorship (JTWROS)
- 1.3 Requirements for Joint Tenants With Right of Survivorship
- 1.4 Joint Tenant With Right of Survivorship (JTWROS) vs. Tenancy in Common (TIC)
- 1.5 Advantages and Disadvantages of JTWROS
- 1.6 What Is the Difference Between Joint Tenancy With Right of Survivorship and Joint Tenancy?
- 1.7 What Are the Dangers of Joint Tenancy?
- 1.8 Can a Joint Tenancy With Right of Survivorship Sell Their Share?
- 1.9 Does Right of Survivorship Override a Will?
- 1.10 The Bottom Line
Joint Tenants With Right of Survivorship (JTWROS)
What Is a Joint Tenant With Right of Survivorship (JTWROS)?
A joint tenant with the right of survivorship (JTWROS) is a legal ownership structure involving two or more parties for any financial account or asset. When one co-owner dies, the surviving co-owner automatically owns the asset.
Each tenant has an equal right to the account’s assets and inherits the other member’s share upon their death.
Key Takeaways
- A JTWROS is a legal ownership structure involving two or more parties for an account or asset.
- Each tenant has an equal right to the account’s assets and inherits the other member’s share upon their death.
- A JTWROS can only be established if the owners acquire the property at the same time, have the same title, have an equal share in the property, and have the same right to possess the assets.
- This agreement avoids probate but does not allow ownership to be transferred to a deceased individual’s heirs.
Understanding Joint Tenant With Right of Survivorship (JTWROS)
A joint tenant with the right of survivorship (JTWROS) is a legal concept that applies to individuals who own assets, accounts, or other types of property. It is a form of co-tenancy, where co-owners have equal rights to the asset and the right of survivorship. If one tenant dies, their ownership stake passes on to the surviving owner(s).
JTWROS is commonly used between married couples or between a parent and their child, but can also be established between unrelated parties. It can involve various financial accounts or assets, such as real estate, checking and savings accounts, mutual funds, and brokerage fund accounts.
This relationship can be broken if one or more parties sell their interest in the asset to someone else, turning it into a tenancy in common.
All members of a brokerage account can conduct investment transactions within the account.
Requirements for Joint Tenants With Right of Survivorship
A JTWROS requires the owners to share four unities:
- The owners must acquire the assets at the same time.
- The owners must have the same title on the assets.
- Each owner must have an equal share of the total assets.
- The owners must have the same right to possess the entirety of the assets.
If any of these four unities isn’t established, a JTWROS cannot be created and the parties are treated as tenants in common.
The language used when creating a JTWROS account must be extremely clear to avoid confusion with tenants in common.
Joint Tenant With Right of Survivorship (JTWROS) vs. Tenancy in Common (TIC)
A JTWROS differs from a tenancy in common. In a JTWROS, ownership passes to surviving parties, while in a TIC, ownership can be passed on to heirs. Parties in a JTWROS must have an equal stake in the asset, while parties in a TIC can have different stakes.
A TIC can be terminated through various means, such as buying out the other party(s), selling the asset, or selling one or more heirs’ stake. Creditors can settle claims against a deceased account owner’s assets, including a joint tenant with right of survivorship, using their previously owned assets.
Advantages and Disadvantages of JTWROS
Entering into a JTWROS has several advantages and disadvantages. Some advantages include avoiding probate, allowing survivors to use assets without interference, and sharing financial responsibility equally. Disadvantages include the inability to pass ownership to heirs, strained relationships, and potential financial burdens.
What Is the Difference Between Joint Tenancy With Right of Survivorship and Joint Tenancy?
The primary difference is that joint tenancy with the right of survivorship passes ownership to surviving parties, while joint tenancy allows ownership to be passed to heirs or beneficiaries. JTWROS also avoids probate and provides equal access and responsibility for the property.
What Are the Dangers of Joint Tenancy?
Joint tenancy may lead to problems if the personal relationship deteriorates and can negatively impact one party if the other doesn’t fulfill their financial obligations. It also prevents owners from passing on their stake to someone of their choosing.
A joint tenant can sell their share, which converts the agreement into a tenancy in common.
Does Right of Survivorship Override a Will?
Right of survivorship overrides wills because JTWROS avoids probate. However, if the last surviving party in a JTWROS dies, the agreement no longer applies, and the asset or property is included in their will.
The Bottom Line
Entering into a joint tenant with the right of survivorship reduces financial strain and provides equal ownership and responsibility. However, individuals should consider other options if they want to pass on their stake to heirs. Consult a financial or legal professional for guidance.