“Joint tenancy” and “survivorship” are related terms that refer to how real estate and other assets can be titled. With joint tenancy, the real estate is titled to two or more people jointly, and each owner possesses an equal share of the real estate and is entitled to live on the entire premises. In a joint tenancy, any co-owner can access all parts of the property without limit and can be at the property at any time. It doesn’t matter if they live together or separately.
The main feature that defines a joint tenancy from other ownership rights is that the surviving co-owner receives the shares held by the other co-owner upon their passing.
A prime example of this would be two spouses who put their home or another piece of real estate in both of their names. The spouses enjoy joint tenancy with survivorship rights to the house and real estate. If one of the owners dies, the surviving owner inherits the deceased owner’s share of the real estate. This is one way to avoid probate for real estate because the jointly owned property passes directly to the surviving owners.
However, unless the property’s title says explicitly “with survivorship rights,” half of the property will still have to be probated following the death of one of the titleholders. It’s possible that half that property may not pass to the surviving joint owner.
Because of this, most probate attorneys in Ohio will advise you against using joint tenancy as a means of protecting their home and other assets as a surefire way to avoid the probate process. Joint tenancy often has more disadvantages than advantages and, in the end, only ends up postponing probate rather than avoiding it altogether.
According to most probate attorneys, joint tenancy with survivorship rights has the following disadvantages:
A trust is often your best bet.
Putting the real estate into a trust makes it follow the rules of the trust instead of probate rules as far as managing the real estate goes and how it’s passed on to heirs.
A joint tenancy with survivorship rights will always go through probate eventually. Real estate titled to a trust never has to go through probate because the real estate is actually owned by the trust instead of a person. Ownership never has to be transferred because the trust can’t “die” in the usual sense of the word. When the trustee dies, the trust will determine who gains control of the trust and property.
This all occurs without having to involve any courts. You get to keep your financial matters private and be sure that your estate is passed on to heirs in the manner you wish. Perhaps equally importantly, the property is protected from any claims from the deceased’s creditors.
The only downside of putting your real estate assets into a trust is the paperwork. The titles of your property have to be transferred to show that the trust now owns the property. There’s some record-keeping and forms to deal with, but a trust can take considerably less time and money to accomplish when compared to the probate process.
Questions about how to plan your estate can be confusing at times. Joint tenancy seems like a good solution at first, but it’s by far not the only—or even best—solution for how to handle your assets once you’ve passed on.
To get the most out of your estate, it’s best to have a team of experienced and knowledgeable attorneys on your side.
Reach out to Heban, Murphree, & Lewandowski today for a free consultation.