Details About Joint Tenancy From a Texarkana Estate Planning Attorney
Joint tenancy with the right of survivorship (JTWROS) is a legal agreement between two or more parties. In most joint tenancy arrangements, a certain asset—such as a bank account or a home—is held in common, with each stakeholder having an equal share in the property. After one of the joint owners passes away, their interest is automatically passed on to the surviving tenant.
Ross & Shoalmire’s team of experienced Texas and Arkansas Estate Planning Attorneys can help you determine whether joint tenancy makes sense for you. Read more to explore the advantages of JTWROS, or send us a message online to begin laying the foundation of your family’s plan for safety, security, and succession.
An Overview of Joint Tenancy with the Right of Survivorship
You don’t have to rent or lease a home to be considered a joint tenant. In fact, Texas and Arkansas laws prohibit most renters from being considered tenants in the context of joint tenancy arrangements. Instead, the term “joint tenancy” simply describes an agreement between two or more people, both of whom enjoy a similar and co-equal right to occupy the same home and any surrounding land.
Most people defined as joint tenants are married couples who own their home or who are still making mortgage payments. However, joint tenancy agreements can exist between many different types of people and parties, including:
- Unmarried or cohabitating couples
- Parents and their adult child or children
- Individuals and legal entities, like a trust or a limited liability company
If joint tenancy is established, it supersedes the terms of a will or revocable living trust. But this doesn’t mean that JTWROS is always a practicable solution—in the event of a divorce, re-marriage, or other unexpected event, joint tenants retain a separate right to sell their interest in a property as they see fit.
Requirements for JTWROS Arrangements
You don’t need to be married or related to enter into a joint tenancy arrangement, but you must still meet other criteria. In both Texas and Arkansas, these criteria are sometimes termed “the four unities.”
The four unities consist of the following conditions:
- Co-owners seeking to enter a joint tenancy with a right of survivorship agreement must acquire the property or other assets at the same time.
- The co-owners must be listed as co-owners on the same title.
- The co-owners must retain a co-equal share in the property—regardless of who made a larger down payment, or which co-owner is planning to pay a greater share of the mortgage.
- The co-owners must always have the same right to possess and inherit the asset.
If any of these conditions aren’t fulfilled, then joint tenancy cannot be established.
Advantages of JTWROS
Joint tenancy with the right of survivorship is an easy-to-establish arrangement that might negate the need to send a home into probate. So long as a valid JTWROS agreement is configured before one of the tenants passes away, their title serves as sufficient evidence of joint tenancy.
Aside from avoiding probate, JTWROS implies certain advantages including, but not limited to:
- The surviving tenant inherits the property almost immediately and without any substantive court-ordered delay.
- The surviving owner can continue to live on the inherited property without having to worry about the demands of angry or disinherited heirs.
- The surviving owner’s share in the property is shielded from creditor claims against the deceased person’s estate.
It’s important to note that establishing joint tenancy doesn’t replace the need for a will—it only applies to a particular piece of property. A properly crafted will allocates all property not held in joint tenancy according to your wishes. And while you can change a will whenever you see fit, a JTWROS arrangement is difficult to amend because one co-owner may simply refuse to do so. So it’s best to have a comprehensive estate plan to address all aspects of your assets and how to protect and distribute them.
Drawbacks of JTWROS
Although joint tenancy with the right of survivorship provides an easy and cost-effective alternative to probate, it isn’t without drawbacks—some of which are significant and negate its JTWROS benefits.
The biggest disadvantages of joint tenancy with the right of survivorship include:
- Probate is merely delayed. Joint tenancy lets a deceased owner pass on their interest to a surviving tenant. But what happens when the surviving tenant dies? Unless they’re willing to re-sell or refinance their home, entering into another JTWROS arrangement with a preferred heir isn’t just impracticable—it’s often precluded by the necessity of fulfilling “the four unities.” If the survivor wishes to keep their home out of probate, they’ll have to invest in an estate plan.
- Disagreements can derail succession. Nobody buys a house with a spouse and expects that they might someday divorce or separate. However, fundamental disagreements between partners happen—and if they happen within your family, they could nullify every advantage offered by JTWROS.
- Co-equal financial contributions are expected. Joint tenants don’t need identical financial circumstances at the time of purchase, but they’re expected to make equitable contributions to the property’s maintenance and upkeep. However, if one party ends up putting more money into a home, they could feel they have more say in its future.
How We Help You Design an Estate Plan With Many Options for Protecting an Inheritance
Joint tenancy with the right of survivorship might help married couples expedite succession and keep their home out of probate, but it isn’t always the best option for families hoping to leave property for the next generation.
Ross & Shoalmire will help you explore arrangements that make sense for your home, family, and specific circumstances. Here are some key strategies our Estate Law Attorneys often recommend.
TIC Arrangement
Tenancy in common (TIC), is a more forward-thinking alternative to JTWROS. If you hold a property as tenants in common, you must meet many of the same requirements as presumptive joint tenants. And, just like joint tenants, each party to a TIC arrangement holds a co-equal share in a property for as long as they remain alive. However, after a tenant in common passes away, their share in a property or other asset is passed on to their chosen beneficiaries—a child, a family friend, even a charity.
The biggest downside to tenancy in common is that inherited shares in the property are often included in the decedent’s estate, which means they must go through Arkansas probate or Texas probate.
Revocable Living Trust
A revocable living trust is a legal entity that can receive, own, and manage many different types of assets—including homes, businesses, and other real properties. The person who establishes the trust, called the “trustor,” the “grantor,” or the “settlor,” retains full control over all trust assets for as long as they remain alive. Furthermore, they may amend and condition the terms of distribution as they see fit. Once they pass away, their appointed successor trustee—who can be their spouse, a child, or another entity—takes charge of the trust, and distributes it in accordance with the trust’s terms. Most trust assets aren’t subject to probate.
TOD Accounts for Non-Real Property Assets
If you own another asset in joint tenancy, such as a bank account or a life insurance policy, its benefits could be bequeathed to heirs through the terms of a transfer-on-death arrangement (TOD). Sometimes termed “beneficiary designations,” TODs permit inheritances outside of probate.
Turning to our skilled Estate Planning legal team means you’ll receive personalized guidance, decades of expertise, and valuable peace of mind, knowing your affairs are in order and your wishes will be followed as intended. If you’ve just moved to Texas or Arkansas, also consider scheduling a consultation with us for a review of your current estate plan to ensure all documents meet state laws.
