Mark and Jennifer own a four-bedroom home in a suburb of Chicago. They have three young children and have been married for ten years. Mark is a stay-at-home father who has a small online freelance business. Jennifer is the VP of a major insurance company. They own the property under joint tenancy with rights of survivorship (JTWROS or joint tenancy). Joint tenancy means that they each have the undivided right to enjoy the property. Mark cannot impede Jennifer from using and enjoying the use of the entire property, and vice versa.
Rights of survivorship mean that if either Mark or Jennifer should die, the title to the property passes to the other without the need for probate or other court proceedings. Mark and Jennifer chose this form of property ownership because they intended to be married throughout their lifetime. They wanted each of them to have the property should one of them pass without needing to go through the time-consuming and costly probate process.
Joint tenancy with rights of survivorship can be used by anyone who wants to own property with another person. There is no requirement that it be a married couple. It seems like a straightforward, inexpensive, and simple way to share ownership of a property. However, some situations can complicate it.
What happens with joint tenancy if a couple gets divorced?
Suppose Jennifer and Mark are undergoing an amicable divorce. Jennifer will be leaving the family home, and she wants Mark and the children to live there. Jennifer can file a new deed with the county recorder that transfers or gifts the property to Mark. Mark will now own the home in its entirety. Upon his death, the home will pass to Mark’s heirs following his Last Will and Testament instructions. If Mark does not have a will, then the property’s legal heirs will be determined by the state intestacy laws.
Suppose Jennifer and Mark are in the process of divorcing and own their home under JTWROS. If either Mark or Jennifer died and continued to share ownership of their family home under joint tenancy, their interest in the property would pass to their ex-spouse (Mark or Jennifer) instead of a current spouse or children.
Another possibility is Mark and the children continue to live in the home. Mark names his oldest child as the joint tenant on the deed to replace Jennifer’s ownership. Later he writes a Last Will and Testament expressing that the interest in the family home should be divided among all three children. Unfortunately, the deed would override the will when Mark dies. The oldest child would be the sole owner of the home and would have no legal obligation to follow his father’s wishes, expressed in the terms of the will.
In the divorce proceeding, the judge will usually sever any property owned in joint tenancy as part of the divorce decree. Doing so will allow Mark and Jennifer to go their separate ways and no longer be tied to joint ownership of marital property. The property deeds will need to be filed with the county recorder’s office. In many cases, the attorneys assisting in the divorce will help prepare and record such paperwork.
Another option is for Mark to buyout Jennifer’s interest in the property. If both agree on a purchase price, Jennifer would then prepare a deed to convey ownership of the home to Mark. The deed is then recorded, and the joint tenancy is severed.
What happens with joint tenancy if one owner wants to sell and the other does not?
Both Mark and Jennifer have the right to enjoy the property fully. Suppose they are at an impasse on whether to sell. They might need to involve their attorneys and the court to resolve the situation—an expensive and stressful proposition.
What happens in joint tenancy if one owner wants their share to go to a third person?
Suppose Jennifer and Mark are on the verge of an amicable divorce, and Mark wants his share of the home to go to his brother. Mark and Jennifer are still married, but their marriage is on shaky ground. Jennifer is very involved in her career and showing little interest in the children. Mark would like to convey his joint tenancy interest in the home to his brother. Mark’s brother and sister-in-law are the children’s guardians, and he wants to ensure that his brother can keep his share of the home if something should happen to him.
If Mark gifts his share of the house to his brother, the joint tenancy would be converted to a tenancy in common. If Mark died, his brother and Jennifer would have an undivided right to occupy and enjoy the property, but there would be no rights of survivorship. If either Jennifer or Mark’s brother died, their interest in the home would pass according to the terms in their will, or if there were no will, to the heirs according to the state’s intestacy law. In many states, a conveyance such as this one could be made by a tenant unilaterally. Mark could gift his interest in the home to his brother without notifying Jennifer.
Mark could even convey the joint tenancy interest to himself, sever the joint tenancy and create a tenancy in common. The law is not consistent in every state, and the conveyance must be recorded in the county recorder’s office to be effective. State law must be consulted before attempting to sever a joint tenancy to ensure that all applicable legal requirements are met.
If Jennifer, Mark, and Mark’s brother all owned the home as joint tenants with rights of survivorship, in some states, this would create a last-person standing situation in which the last surviving tenant would receive the entire interest in the property. In other states, if one owner attempted to create a tenancy in common by conveying their interest to themselves, only their interest would be converted to a tenancy in common. The remaining joint tenant would continue to own the other two shares in the home as joint tenants with rights of survivorship.
What happens if one owner wants a property to go to their children instead of a second spouse?
Jennifer has remarried and purchased a new home with her husband. Suppose Jennifer and Mark have divorced and Jennifer has remarried. She and her new husband own a home with joint tenancy with rights of survivorship. Jennifer may want to leave her joint tenancy rights to her children instead of her new spouse. A tenancy in common may be a better option for her.
What happens if joint tenants are not married and disagree?
Suppose Mark and Jennifer are not married. If Mark and Jennifer own the home as joint tenants and it becomes a source of conflict, they may need to ask a judge to partition the property. The judge can divide the land and building into equal shares for Mark and Jennifer. Since this would be impossible to do when the property is a single home on a piece of land, the judge may order that the property be sold, and the proceeds of the sale be split between Mark and Jennifer.
Get your attorney’s help
In many cases, joint tenancy is a simple and effective way to jointly own and transfer property upon one owner’s death. However, life can throw unexpected curveballs, in which case, joint tenancy can have unintended consequences. Joint tenancy survivorship provisions nearly always override the provisions of a will or a trust. A fact that is unknown to many when preparing their estate plan with an online document preparation company of a general practitioner type attorney.
If you own property in joint tenancy, seek the advice of an estate planning attorney. We can help you carefully consider and plan for your estate, so joint tenancy is not used improperly—a situation that could set your loved ones up for significant misunderstanding and legal expense.