Joint tenancy can be useful in certain situations

Joint tenancy is a legal means whereby one or more persons may own property, motor vehicles and/or securities in equal shares. It usually allows for an easy transfer of the property upon the death of one of the tenants.

Each joint tenant, regardless of who purchased or originally owned the property, has the right to use and share in the income from the jointly owned property. A joint tenant's interest in the property terminates upon his or her death, and the surviving joint tenant or tenants then own the property outright. Descendants, heirs and beneficiaries are barred from owning the property.

Joint tenancy should not be relied on as a substitute for a Will. It does not cover unanticipated contingencies. While provides for a successor, it does not provide a comprehensive plan for the disposition of one's entire estate as a Will does.

Joint tenancy is not the only legal way to hold title to property with another person. Two or more persons may own property as tenants-in-common or tenants by entireties. Tenants-in-common, like joint tenants, have the right to use and share in the income from the property. However, when a tenant-in-common dies, his or her interest in the property does not pass automatically to the surviving co-tenant. It passes on, instead, as part of the estate to the heirs or the beneficiaries under a Will. Tenants by entireties allows a husband and wife to hold their residence free of claims against only one spouse.

When the ownership is in real estate, the deed normally includes the words "as joint tenants and not as tenants-in-common." For registered securities (stocks and bonds) the names of the owners are stated followed by the words "as joint tenants with right of survivorship, and not as tenants-in-common." For bank accounts (both checking and savings) all of the joint tenants sign a signature card. The agreement on the back of the card creates a joint tenancy in the depositors.

U.S. savings bonds and other Treasury obligations, when the owners are listed as "A or B," either one may cash in the bond at any time. When one has died, the survivor is the sole owner. If an asset is registered to "A payable on death to B," the asset is not owned in joint tenancy. Rather, the asset is payable to B on A's death, but B has no rights during A's lifetime.

Among other features of joint tenancy are the following:

Joint tenancy may have other consequences. For example, if property of any kind is put in joint tenancy with a relative who receives welfare or other benefits (such as Social Security benefits), the relative's entitlement to these benefits may be jeopardized. If you place your residence in joint tenancy, you may lose your right to advantageous senior citizen real estate tax treatment. And, if you create a joint tenancy with a child (or anyone else), the child's creditors may seek to collect your child's debt from the property or from the proceeds of a judicial sale.

Joint tenancy is useful in the right case. However, joint tenancies are not a simple solution to estate problems but can, in fact, create problems where none existed. The costs of preparing a Will, tax planning and probate may be of little significance compared with the unintended problems that can arise from using joint tenancies indiscriminately. For a full explanation of the advantages and disadvantages of joint tenancy in your particular situation, you should consult a lawyer.

 

Note: This information was prepared as a public service by the Illinois State Bar Association and is a joint project with the Illinois Press Association. Its purpose is to inform citizens of their legal rights and obligations.

© Illinois State Bar Association

If you have questions about the application of the law in a particular case, consult your lawyer. The law is constantly changing. Information on this site or any site to which we link does not constitute legal advice.