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Joint Tenancy? Tenancy-in-Common? What’s the difference?

What is Joint Tenancy?

Joint Tenancy is a form of ownership where two or more people own the entire property together. There is no fractional ownership in a joint tenancy. The defining feature of a joint tenancy is the right of survivorship. A right of survivorship means that, by operation of law, if one of the joint owners dies, the other owner (or owners) becomes the owner of the whole property. This occurs whether or not the deceased owner has made a gift of the property in his or her will.

What is Tenancy-in-Common?

A tenancy-in-common is another form of ownership. Fractional ownership is possible as a tenant-in-common. For example, as tenants-in-common, if one party contributes 70% of the purchase price, and the other party contributes 30% of the purchase price, these parties’ ownership shares may reflect their contributions. The right of survivorship does not apply to a tenancy-in-common.  If a tenant-in-common dies, his interest in the property will pass to his estate and be distributed in accordance with the terms of his will.

Which form of ownership is best for me?

The form of ownership that is best for you depends on your goals.

Generally speaking, joint tenancy is the desired form of ownership for married couples who want their spouse to become the owner of the whole property if one spouse were to pass away. Joint tenancy is also the form of ownership used by individuals who are putting an adult child on title to their home for estate planning purposes. Note, however, that if an adult child or adult children are being put on title for estate planning purposes (in order for the right of survivorship to apply and avoid the property being subject to probate), there are many other considerations which must be taken into account, which are beyond the scope of this article. Individuals who are considering adding an adult child to title to their property should seek legal advice prior to doing so and, with their lawyer, should ensure that their intentions are documented. Failing to do so may lead to fighting amongst beneficiaries of the estate upon the death of the owner.

Tenancy-in-common is an appropriate form of ownership for individuals who do not want the right of survivorship to apply. For example, if you are purchasing property with a sibling, a business partner, or a second spouse, tenancy-in-common will allow your interest in the property to pass to the beneficiaries of your estate on your death, rather than to your joint owner.

On occasion, a blended form of ownership may be appropriate. For example, Fred and Wilma, who are married, wish to purchase a property with Barney and Betty, who are also married. Fred and Wilma may own their 50% of the property as joint tenants, and Barney and Betty may own their 50% of the property as joint tenants, but with respect to the other couple, the property is held as tenants-in-common.

Conclusion

Whether you own your property as a tenant-in-common or as a joint tenant, the cornerstones of your estate plan are a valid, up-to-date will and power of attorney. These documents will ensure that your loved ones will be able to assist you in dealing with your property in the event of incapacity and receive the benefit of your property in accordance with your wishes in the event of death.


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