Joint Tenants with Rights of Survivorship: Pros and Cons

Joint owners in Florida generally choose between three types of joint title ownership structures. The first is tenancy by the entireties. This arrangement is reserved for married couples only and gives each partner an undivided interest in the property. Neither partner can do anything to their “share” (sell it, mortgage it, etc.) without the consent of the other. If one partner dies, full title to the property automatically vests in the other partner without the need for probate.

The second type of joint ownership structure is a tenancy in common. This is a type of ownership in which each owner has the right to sell his or her portion without the permission of the other owners, and all owners have their own separate share of the estate.  If one of the owners dies, his portion can pass through to his heirs but often has to go through probate.

The other kind of title available is joint tenants with rights of survivorship (JTWROS). While this is an option for any owners that buy property together, it is typically used by couples or family member due to the survivorship aspect (which provides for automatic vesting of title to the surviving owner upon one owner’s death). With this title, each partner can typically sell or modify their share as they like. But when one partner dies, their share is automatically transferred to the other partner without the need for probate. Besides the convenience, there are other advantages of JTWROS. There are, however, some disadvantages as well.

Advantages of JTWROS

One of the major advantages of JTWROS is that it allows the surviving partner to avoid the legal system when it comes to inheriting the other partner’s share. The deceased partner’s interest does not go through probate, the process by which a court distributes assets of a decedent’s estate.

Another advantage appears in cases like divorce or separation. If one partner wants out, they can easily sell their share of the property to another person. This can be especially beneficial if one partner remarries and wants to bring their new spouse into the investment. For more information, visit Marina Title’s services page.

Disadvantages of JTWROS

While a JTWROS can save surviving partners time and money, it does come with its disadvantages. One of the biggest is that creditors may be able to reclaim the property to settle a partner’s debt after their death or seize shares of the property if a partner has credit issues, such as filing for bankruptcy, while they are living. A creditor may also be able to seize property owned by a bankrupt partner to recoup their losses.

Issues can also crop up if the joint partner is not a spouse. For instance, if a child is named as the joint owner, the property may be considered a gift to them. If the value of that share is large enough, there may be a need to file a gift tax return and possibly pay said taxes.

Finally, the fact that shares can be sold without the consent of the other partner can become problematic. If your partner decides to sell their share to cover a debt, you could suddenly be in a partnership with a total stranger.

Is a JTWROS Worth It?

Whether the benefits of a JTWROS outweigh the disadvantages comes back to the type of relationship you and your partner have. If you are going into a partnership with someone you have known a relatively short amount of time, a title with less risk may be advisable.

If you are still unsure about the risks and benefits of the various types of titles, let the experts and Marina Title help. Give us a call at (305) 901-5628  or send us an email at [email protected].