When it comes to real estate ownership, there are two main types of arrangements: joint tenancy and tenancy in common. Both have their own unique benefits and drawbacks, so it can be tough to decide which one is right for you or your client. In this blog post, we will discuss the key differences between joint tenancy and tenancy in common, so you can make an informed decision about which type of real estate ownership is best for you!

Joint Tenancy

The key benefit of joint tenancy is the right of survivorship. This means that when one owner dies, the other owners automatically inherit their share of the property. This can be a big advantage if you are looking to avoid probate or want to make sure your loved ones inherit your property quickly and easily.

Another advantage of joint tenancy is that it can be used to bypass estate taxes. When an owner dies, their share of the property is included in their estate and is subject to estate taxes. However, if the property is held in joint tenancy, then the surviving owners will automatically own 100% of the property after the first owner’s death, and no estate taxes will be due.

Tenancy in Common

One key disadvantage of joint tenancy is the fact that it can be difficult to sell or transfer property ownership. This is because the right of survivorship means that the other owners have to consent to any sale or transfer. Another disadvantage of joint tenancy is that it can lead to disputes between co-owners if they cannot agree on how to manage the property.

Tenancy in common is a bit more flexible than a joint tenancy, since each owner has an equal share of the property and can sell, lease, or mortgage their share without the consent of the other owners. However, tenancy in common does not offer the same protections as joint tenancy when it comes to estate taxes and probate.

When it comes to ownership of real property, there are other factors to consider. Here are just a few that should be kept in mind:

Right of Survivorship

The right of survivorship is the key benefit of joint tenancy. This means that when one owner dies, the other owners automatically inherit their share of the property. This can be a big advantage if you are looking to avoid probate or want to make sure your loved ones inherit your property quickly and easily.

Another advantage of joint tenancy is that it can be used to bypass estate taxes. When an owner dies, their share of the property is included in their estate and is subject to estate taxes. However, if the property is held in joint tenancy, then the surviving owners will automatically own 100% of the property after the first owner’s death, and no estate taxes will be due.

Estate Taxes

One key disadvantage of joint tenancy is the fact that it can be difficult to sell or transfer property ownership. This is because the right of survivorship means that the other owners have to consent to any sale or transfer. Another disadvantage of joint tenancy is that it can lead to disputes between co-owners if they cannot agree on how to manage the property.

Tenancy in common is a bit more flexible than a joint tenancy, since each owner has an equal share of the property and can sell, lease, or mortgage their share without the consent of the other owners. However, tenancy in common does not offer the same protections as joint tenancy when it comes to estate taxes and probate.

Avoiding Probate with Joint Tenancy

When an owner dies, their share of the property is included in their estate and goes through probate. Probate is a legal process that can be time-consuming and expensive, and it’s one of the main reasons why people choose to hold real estate in joint tenancy. However, if you are looking to avoid probate altogether, other options may be available to you.

If you have a valid will, you can name someone to manage your property after you die. This person is called an executor or administrator, and they will be responsible for settling your estate and distributing your assets according to your will. If you don’t have a will, then the court will appoint an executor who will handle these tasks.

Living Trust

Another option is to create a living trust. A living trust is a legal document that allows you to appoint someone to manage your property after you die. The advantage of a living trust is that it avoids the need for probate since the assets are transferred directly to the beneficiary. However, setting up a living trust can be expensive and complicated, so it’s not right for everyone.

In Summary

To recap, there are two types of real estate arrangements: joint tenancy and tenancy in common. The joint tenancy offers the right of survivorship, which can be helpful when transferring property ownership after someone dies. Tenancy in common is more flexible than joint tenancy but does not offer the same protection from estate taxes and probate. So it all comes down to what you need! If you have any questions or would like help deciding which type of real estate arrangement is right for you, please don’t hesitate to contact a real estate attorney.

Thank you for reading! I hope this article was helpful in explaining the difference between joint tenancy and tenancy in common. If you have any questions, please don’t hesitate to contact a real estate attorney. Thanks again! 🙂