Joint tenancy is a way for two or more people to own property together. Its main feature is the right of survivorship: when one owner dies, their interest generally passes directly to the surviving owner or owners, without probate for that interest. For example, if two people own a home as joint tenants and one dies, the survivor generally becomes the sole owner. The deceased owner’s will cannot direct their share to someone else while the joint tenancy remains in place.
That simplicity can be useful, but joint tenancy is not a complete estate plan.
What are the drawbacks?
You give someone ownership now. Adding a child, sibling, or partner to your deed gives them a present interest in the property. That is different from arranging for them to inherit it later. Their debts or legal troubles may also put their interest at risk.
Ownership can bring shared legal concerns. A dispute over the property can affect every owner. Claims arising from the property, such as an injury on the premises, may involve all title owners. Joint tenancy does not make every owner automatically responsible for every debt of another owner, but it does connect their financial and legal interests.
Survivorship may fail to simplify a simultaneous death. If joint tenants die in the same event and it cannot be determined who survived whom, each person’s share may have to be handled through their own estate. Depending on their plans, that could mean separate probate proceedings.
Married couples may miss a tax benefit. When one spouse dies, qualifying community property can generally receive a new tax basis for the entire property. Property held in joint tenancy may receive that adjustment only for the deceased spouse’s interest. If the property has increased in value, that difference could mean more capital gains tax when the survivor sells. The result depends on the couple’s circumstances, so it is worth reviewing before choosing how to hold title.
What are the alternatives?
A living trust can let you keep control during your lifetime and give instructions for what happens after your death. When properly set up and funded, it can also help avoid probate. A standard revocable living trust does not, by itself, protect your property from your own creditors.
Tenancy in common allows co-owners to hold different ownership shares and decide who inherits their respective interests. Each owner still needs a plan for passing on their share.
For spouses and registered domestic partners, community property with right of survivorship may also be an option. Its tax treatment should be reviewed in light of your specific situation.
Joint tenancy can be the right choice, but avoiding probate is only one consideration. Before adding someone to a deed or changing how you hold title, make sure the decision supports what you want to happen both now and later.
If you’re considering how to title property you co-own, or trying to understand whether joint tenancy or a living trust is the better fit for your family, it’s worth getting guidance tailored to your situation before a disagreement — or an unplanned death — forces the issue.
Schedule a 15-minute intro call to talk through your options.