Joint ownership refers to property held by two or more people. It typically happens when family members or business partners invest in a property together. Joint ownership is more common with married couple, who buy a home or share assets.
Depending on the type of joint ownership, co-owners may share equal or varying degrees of interest in the property. While its main purpose is to allow people to own property together easily, this arrangement can also play a key role in where these assets go after you pass away. New York recognizes three primary types of joint ownership, each with different implications for estate planning.
Joint tenancy with right of survivorship
Joint tenancy with right of survivorship allows multiple people to co-own property, with each having an equal stake. The term “right of survivorship” refers to the automatic transfer of a deceased owner’s share to the remaining owners, thus avoiding the probate process. This can simplify the transfer process, reduce legal costs and make settling the estate quicker.
However, if an owner decides to sell or transfer their interest, it can turn this type of joint ownership into a tenancy in common. This will subject the property to probate.
Tenancy by the entirety
This form of joint ownership is exclusive to married couples. It also includes the right of survivorship. This ensures that the surviving spouse receives the property directly, bypassing probate. Moreover, one spouse cannot sell or transfer their share without the agreement of the other.
It’s important to note that divorce can end this type of ownership. In such cases, updating your estate plan to reflect the new circumstances may be necessary.
Tenancy in common
Unlike the other two types of joint tenancy, tenancy in common has no right of survivorship. The main benefit is that each owner can possess unequal shares. This means they also have the freedom to transfer their interest during their lifetime or through their will. However, when an owner passes away, their share becomes part of their estate and is subject to probate.
Know how certain assets fit into your estate plan
Understanding what type of joint ownership you have with your shared properties is crucial. An attorney can evaluate your situation and ensure that your estate plan meets your objectives.