Joint ownership is a legal arrangement where two or more people own property together. This can apply to various assets, including real estate, vehicles and investments. Whether you’re buying property with a spouse, sharing a bank account with a family member or investing with a business partner, the type of joint ownership you choose can have far-reaching consequences, especially when it comes to estate planning.
Joint Tenancy with Right of Survivorship (JTWROS)
This is an ownership structure where each co-owner possesses equal rights to the whole property. The key characteristic of JTWROS is the “right of survivorship.” Under this arrangement, when one co-owner passes away, their portion of the property transfers automatically to the remaining owner(s), bypassing the probate process.
For example, if you and a business partner own a commercial property as JTWROS, and your partner passes away, you would become the sole owner of the property immediately. The asset wouldn’t need to go through probate, potentially saving time and money. However, while JTWROS can avoid probate, it doesn’t protect against other potential issues like creditor claims or estate taxes.
Moreover, in New York, married couples automatically hold real property as Tenancy by the Entirety unless they specify otherwise. This form of ownership functions similarly to JTWROS but offers additional protections.
Tenancy in Common (TIC)
With TIC, each owner has their own individual share of the property. When one owner dies, their share doesn’t automatically go to the other owners. Instead, it becomes part of their estate and goes through probate. From there, the executor will distribute their share of the property according to their will. If they didn’t leave a will, the court will distribute it according to New York’s intestacy laws.
While it doesn’t avoid probate like JTWROS, TIC can provide more flexibility in estate planning. Each owner can decide who inherits their share independently of the other owners. It also allows for easier transfer of individual shares during the owner’s lifetime.
Gain clarity on your assets
Understanding how to manage jointly owned assets in your estate plan can be difficult. If you’re unsure about how to address them in your will or trust, consider consulting with an attorney.
