What Is Joint Tenancy?

Joint tenancy is an arrangement that allows beneficiaries to access your account without having to go to court. Couples and business partners can take title to each other's bank accounts, 澳洲幸运5官方开奖结果体彩网:brokerage accounts, real estate, and 澳洲幸运5官方开奖结果体彩网:personal property as joint tenants with rights of 💃survivorship (JTWROS).

Joint Tenancy With Survivorship

Joint tenancy with rights of survivorship (JTWROS) is a type of account that is owned by at least two people. In this arrangement, tenants have an equal right to the account's assets. They are also afforded 澳洲幸运5官方开奖结果体彩网:survivorship rights in the event of the death of 🌊another account holder.

In simple terms, it means that when one partner or spouse dies, the other receives all of the money or property. That is why many married couples and business partners choose this option. However, there are some things you should consider before entering a joint tenancy. Below, we'll take a look at the advantages and disadvantages of this arrangement.

Joint Tenancy and Probate Court

When a person dies, a probate court will review the deceased's will. The court's purpose is to decide whether the will is valid and legally binding. The probate court also determines what 澳洲幸运5官方开奖结果体彩网:liabilities and assets 🌠the deceased may have. After a thorough review, the court distributes any r🐼emaining assets to heirs.

If an individual dies without a will, the process becomes more complicated. Without a will, the probate court does not have any written evidence of how the deceased would ♕like the assets distributed.

The downside to the probate process is that it can take a substantial amount of time to sort through the estate. That means it will take even longer for 澳洲幸运5官方开奖结果体彩网:beneficiaries to receive their inheritance.

JTWROS automatically transfers ownership to a spouse or business partner upon the death of the first partner, so 澳洲幸运5官方开奖结果体彩网:it avoids probate. That is an enormous advantage for t𓂃hose who need the funds immediately.

Advantages of Joint Tenancy

Joint Tenancy and Equal Responsibility

When a married couple ꦬor business partners own an asset that is titled joint tenancy with right of survivorship, it means all individuals are responsible for that asset. In other words, they all enjoy the positive attributes and share in the liabilities equally. Tha🎀t also means no partners can incur debts on the asset without also indebting themselves.

For example, if a couple is 澳洲幸运5官方开奖结果体彩网:planning to divorce, one spouse cannot obtain a loan against the couple's home and leave the debt with the other. The moment one party takes out the loan, they are both equally responsiꦗble for𒁏 its repayment. Similarly, a spouse, pending a divorce, may not lease a portion of the property without sharing the proceeds with the other.

Continuity of Joint Tenancy

When someone dies, their assets are often frozen until the probate court decides essential issues. The court must determine whether the assets are 澳洲幸运5官方开奖结果体彩网:encumbered. Then, they figure out how to distribute the remaining assets to 🌳heirs. This process can be a problem for a surviving spouse who has outstanding debts or large fixed expenses.

However, by owning an asset as a joint tenant, the surviving spouse or business partner may use the property in any fashion that they see fit. The joint tenant may hold it, sell it, or mortgage it. In fact, the law states that immediately upon the death of one tenant, ow♏nership is transferred to the survivor. Joint tenancy is particularly♉ useful for passing on a family business without disruption when the intended heirs are partners.

Downsides of Joint Tenancy

Managing Relationships and Joint Tenancy

Having two people own the entire asset is a disadvantage in an unstable relationship, regardless of whether the relationship is personal or professional. If a couple or business partners, disagree, neither party can sell or encumber the asset withou🍷t the consent of all parties. This restriction is intended to prevent abuses.

However, the need to get agreement from all parties can make it difficult to take necessary actions. For instance, the purpose of a joint tenancy with right of survivorship is intended to make it easier to exercise another person's interest. This task will be made more difficult if that joint tenancy is complicated by parties that do not agree.

Frozen Bank Accounts

The probate court may also freeze the account of joint tenants in some situations. For example, the court might freeze an account if the deceased is deeply in debt. Action is more likely if there is a risk that a surviving partner might 澳洲幸运5官方开奖结果体彩网:liquidate the account to avoid paying the obligations.

An account can also be frozen if there is a disp🍷ute over whether a surviving spouse or business partner actually contributed to it. As a general rule, acting in good faith reduces the probability that an account will be frozen.

Losing Control of Assets

Another potential pitfall of joint tenancy is the loss of control over the final distribution of assets. When surviving partners assume control over the joint asset, they can sell it or bequeath it to someone else. In other words, the deceased does not decide on the ultimate 澳洲幸运5官方开奖结果体彩网:disposition of the asset after death.

Tenancy iꦯn Common: An Alternative to Joint Tenancy

The main alternative to joint tenancy is a 澳洲幸运5官方开奖结果体彩网:tenancy in common. Some of the benefits of tenancy in common are:

The Asset Is Divvied Up

Each owner is assigned 澳洲幸运5官方开奖结果体彩网:fractional ownership, which may or may not b⭕e an equal portion. Additionally, each party can legally sell their own share without another party's approval or consent.

The Asset Will Pass to Heirs

Unlike with JTWROS, ownership of the asset will not automatically transfer to the surviving account owner upon the first owner's death. In fact, the asset will pass according to provisions made in the will of the deceased. Typically, most tenants leave the asset to their heirs. However, it could still pass to the other account owner if there is such a provision in the will.

Assets Can Be Accessed

If o𒊎ne owner becomes disabled😼 or dies, the other owner should still be able to access their share of the assets. That means that they can sell a portion of the asset without waiting for a probate court decision.

The Bottom Line

Both joint tenancy with riౠght of survivorship and tenancy in common have attractive features. Individuals should eval𝓰uate their situations to determine which option is more favorable before setting up either arrangement.