Some estate planning terminology, such as the right of survivorship, can be something that the average person doesn’t have much experience with. Nevertheless, these types of terms have specific meaning in your plan, and you need to be comfortable with them. Let’s take a closer look at the right of survivorship and how it can affect your estate plan.
Jointly Owned Property
People sometimes own property jointly with others. This jointly owned property primarily comes in one of two different forms: “joint tenancy” or “tenancy in common.” In either form of joint ownership, each owner has an undivided right to possess and use the property. The primary difference is the control each owner has over his or her ownership interest.
Right of Survivorship
A joint tenancy is also known as joint tenancy with the right of survivorship. Property owned with a right of survivorship gives each co-owner the automatic right to become the sole owner upon the death of the other joint owners.
For example, let’s say you and your two siblings inherit your grandfather’s home as joint tenants with right of survivorship. Upon inheriting the property, each of you is an equal co-owner. As each sibling dies, the remaining siblings remain joint owners. If you are the only remaining sibling, you become the sole owner automatically.
Contrast this with tenants in common. If you and your siblings were given the property as tenants in common, and if both of your siblings die, you wouldn’t automatically become the sole owner because there is no right of survivorship in a tenancy in common. Instead, the property rights your siblings owned would pass according to the direction of their own estate plan, and you could wind up being a co-owner with their surviving spouse or with one or more of their children.
Right of Survivorship and Estate Planning
If you own property as a joint tenant with right of survivorship, your estate plan will need to take this into account. For example, let’s say you and your spouse own your home as joint tenants with right of survivorship. Upon your death your spouse would become the sole owner. This will happen outside of probate, and may interfere with important tax planning considerations in your estate plan.
Moreover, as a sole owner, your spouse’s estate plan would need to address what happens to the property after his or her death. Unless your spouse takes estate planning steps, the home would have to pass through probate as individually owned property. So, even though jointly owned property with a right of survivorship will avoid probate at least once, the sole remaining owner will have to address the property in his or her estate plan.
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