If you’ve never purchased a property, you may not know what I’m talking about. Both Joint Tenancy with right of survivorship and tenants-in-common dictate how a property is owned and who inherits it when one or more of the owners passes away.
In Connecticut, tenancy in common is the default interest for a deed with two or more individuals. So In order for that default to change to Joint Tenancy, the deed has to clearly state the words “joint tenants” or “survivor”.
What Is Tenants-In-Common?
When a property is owned as tenants-in-common, each party owns an individual undivided interest in their respective share. Meaning, if you own property as a tenant in common, when you die, YOUR share goes into YOUR estate and passes to your heirs in accordance with your Will or the laws of intestacy (in the absence of a will).
Tenants in common do not have the right of survivorship and do not inherit or pass their share of the property to the co-owner upon their death. Automatically that is. Of course, if you own your home as tenants-in-common, you can certainly leave your share of the property to the other owner in your will.
What Is Joint Tenancy?
When you own property as a joint tenant with the right of survivorship, you also own an undivided interest in the property with the other owner. If one of you dies, the other inherits the share through the right of survivorship, without having to go through probate. That’s the main reason survivorship is the type of ownership people choose.
The shared rights may be in equal or unequal shares. And if one joint tenant conveys his/her portion of the property to someone else, the joint tenancy breaks and becomes a tenancy in common.
Does Joint Tenancy Avoid “Probate”?
That’s a trick question. While it depends on what you mean when you say “probate”, owning property that’s joint tenancy with rights of survivorship means that you don’t have to go through probate. But to gain ownership of the property, there are steps that need to be taken with the probate court:
In the state of Connecticut, when someone dies an estate tax return has to be filed
While it is true that a joint tenancy property with the right of survivorship is not considered a probated asset, an estate tax return has to be filed. Most likely you won’t owe anything unless your assets are worth more than 7 Million Dollars. (Currently $7.1M to be exact).
But, it is necessary to file the tax return with the probate court, which will then issue a certificate of no tax, that is recorded on the land records. This is how title to real estate is documented from two joint owners to the sole survivor. If the surviving spouse attempts to sell the property, he or she will have trouble because the land records show that the home is owned by two people.
To ensure that the land records properly reflect that the surviving spouse is now the sole owner, an Estate Tax Return has to be filed with the Probate Court.
When the surviving owner passes away, the property will have to go through probate as an individually owned asset
So Probate is really just delayed, and not avoided entirely. Unless that is, the last owner used a different probate-avoidance method, such as transferring the property to a living trust.
Probate is not avoided if both owners die simultaneously
It’s pretty unlikely, but certainly possible. Each owner’s share of the property would pass under the terms of his or her will. If a joint tenant died without a valid will, the property would go to each owner’s closest relatives under state law. Either way, probate would probably be necessary.
So Which Is Better? Joint Tenancy or Tenants-In-Common
While there are pros and cons to both. Each individual situation will be the deciding factor. Say, for example, I am buying a house with my husband, and want him to have the house through the right of survivorship if I go first. Then joint tenancy makes more sense to me.
But, if I was on my second marriage, and we both have kids from previous relationships, I might want to be tenants-in-common, so that my share of the house goes to my kids and not his.
Tenants-in-common may give you more control over what happens with your share of the house BUT it also makes each share of the property an individually owned asset, which will have to go through probate, and thus could be liquidated in order to cover any debts associated with the estate.
In either case, it is important to prepare for the possible incapacitation of one of the owners. If one owner is unable to make decisions for him or herself, the other owner’s hands are essentially tied when it comes to the property.
One way to avoid such a situation is to be prepared with a durable power of attorney. So if you are unable to make financial decisions for yourself, your attorney-in-fact would step in.
An Estate Planning Attorney Is Your Best Bet!
Discussing your individual estate needs with an estate planning attorney is the best decision you can make in this situation. Whether you need a Will, power of attorney, healthcare directive, trust, or all of the above. You will be covered from all legal standpoints and ensure that your property ends up in the right hands with the least amount of complications.
Call our office today at 860-669-1222, to schedule a consultation with Attorney Joan Wilson.
Marketing Director & Probate Paralegal at RWC, LLC, Attorneys & Counselors at Law
Ukraine born and Israel / Miami, FL raised. University of Miami graduate in the Marketing field.
Mom to a girl, a boy, and a Siberian Husky.