Joint Tenancy

What is Joint Tenancy?

Joint tenancy is a method of ownership that allows two or more people to own property in equal shares, so that when one owner (joint tenant) dies, the property automatically passes to the surviving joint tenant(s) without going through probate.

Are there Tax Implications of Receiving Joint Tenancy Property?

Although property held in joint tenancy is not included in a decedent’s probate estate, it is included in a decedent’s taxable estate. Short answer – For 2011, the current estate tax exemption amount is $5,000,000 per individual, with a 35% estate tax for any amount over the exemption. Thus, for someone with no estate planning (No Trust or other estate-tax-saving device), no estate tax is due for joint tenancy property received with a date-of-death value below $5,000,000. Anything over that amount will be taxed at 35%, due 9 months, in cash to the IRS, from the date of death. There are numerous additional factors to consider if you have or believe you will have an estate over $5,000,000. For more information on taxable estates please refer to the Estate Tax page.

How is a Joint Tenancy Created?

A joint tenancy for real property is created by a written document, such a trust or grant deed when purchasing or re-titling real property. For example, “Frank and Lilian Burns, as joint tenants.” This puts the world on notice that once one of the joint tenants dies, the surviving joint tenant will become the 100% owner of the property. Since the property was held in joint tenancy, no probate is necessary to transfer the property.

Can Any Property be Held in Joint Tenancy?

Real property (houses, land, buildings, apartments, condominiums) are the most common assets held in joint tenancy. However, bank accounts, automobiles, bonds and stocks can also be held in joint tenancy.

Joint Tenancy versus Tenancy in Common

A tenancy in common (TIC) is a method of ownership that allows multiple (two or more) parties to own a single piece of property. Unlike a joint tenancy, TIC owners are not divided in equal shares and do not have a right of survivorship. This means that when a TIC owner dies, their share does not automatically pass to the surviving TIC owner(s), they may pass to anyone. Thus, an asset held in TIC will pass through probate, while an asset held in Joint Tenancy will not.

Can a Joint Tenancy Asset Become a Tenancy in Common Asset?

Yes, a joint tenancy asset (such as a house) can become a Tenancy in Common (TIC) asset if the joint tenancy is severed. A joint tenancy can be severed by one joint tenant party acting alone, by changing title from joint tenancy to TIC, or by the simple act of selling his/her joint tenancy interest to another party. Additionally, divorce is another common form of severing a joint tenancy. If you are unsure whether an asset is held as a joint tenancy or tenancy in common, be sure to ask an attorney as this will decide whether the asset will need to go through probate or not.

 

How to Change the Title on Real Property after a Joint Tenant dies?

To transfer real property held in Joint Tenancy from a decedent to the surviving joint tenant(s) the following will be needed:

1-A certified death certificate of the deceased joint tenant.

2-An affidavit signed by any individual with knowledge of the facts. (Usually a family relative or the surviving joint tenant).

The following is a Sample Affidavit of Death of Joint Tenant. To download a .pdf version of this form, click here.

AFFIDAVIT OF DEATH OF JOINT TENANT

STATE OF CALIFORNIA

COUNTY OF [insert county]

I, [insert name], being duly sworn, say:

I am 18 years of age or over. The decedent described in the attached certified copy of Certificate of Death is the same person as [name of person who died here], who is named as one of the parties in the deed dated [date], executed by [name of grantor] to [name of decedent] and [name of surviving joint tenant], as joint tenants, recorded on [date], in [ e.g., Book __, page __] of the Official Records of [insert county] County, California, covering the property situated in [city], [insert county] County, California, described as follows:

[Provide legal description]

Dated: _______

__[Signature]___

__[Typed name]_

Affiant

 

Subscribed and sworn to before me on [date]

___[Signature]___

___[Typed name]__

[Seal] Notary Public for the
State of California

 

The affidavit requires a full legal description of the property. A legal description can usually be found on a previous grant deed or the original purchase documents if those files are handy. The following is an example of a full legal description:

A PARCEL OF LAND LOCATED IN THE STATE OF CA, COUNTY OF LOS ANGELES, WITH A SITUS ADDRESS OF 915 REAL ESTATE ST, LOS ANGELES CA 90010-3531 C059 CURRENTLY OWNED BY HOUSER HOMER J AND LOTS ROSE M AND HAVING A TAX ASSESSOR NUMBER OF 5090-012-034 AND BEING THE SAME PROPERTY MORE FULLY DESCRIBED AS TRACT # 8076 AND DESCRIBED IN DOCUMENT NUMBER 1020134 DATED 03/22/2003 AND RECORDED 04/14/2003.

Once completed, the form will need to be notarized. After notarization, you will need to file the Affidavit along with Death Certificate with the County Recorder’s Office. There might be a fee associated with this. It is advisable to take multiple copies of each document.

After these documents are recorded, the property will have officially been transferred to the surviving joint tenant(s) and the surviving joint tenant(s) will be the new legal owner(s) in equal shares. Note – If only one surviving joint tenant exists, the property is technically no longer held as “joint tenancy” as there is only one owner. In such a situation, upon the death of the surviving joint tenant, the property will need to go through probate if title remains unchanged.