Do the Co-Owners Have Survivorship Rights? How to Change a Deed From the State’s Default

At some point, a couple might decide to change the way they vest a deed, to add rights of survivorship. It’s a commonly made decision.

Say a couple has been together for some time and each wants to be sure their co-owner gets their interest in the home without having to pull it through the probate court, for example.

So now, they are thinking about changing the title to show their names, followed by the words joint tenants with right of survivorship.

Here, we walk through various aspects of their journey.

What Your Deed Says Today: Are You Tenants in Common?

Maybe the deed is currently in both of your names. And maybe that defaults to tenants in common (TIC) in your state. In this form of legal ownership, a home has two or more co-owners. And in many states, TIC is the default form of co-ownership unless the pair wrote survivorship rights into their co-owned deed.

How does this “default” work? Sometimes, people co-purchase a home and forget to designate how they want to vest their interests in their new deed. In many states, the law classifies a deed that doesn’t specify any vesting type as being held as a tenancy in common. But some state laws do assume that married couples want rights of survivorship. In short: First, be sure you know what your deed actually gives each of you.

Now, let’s assume you own your home as tenants in common. This means either of you may sell your share of the property, independently. And either of you may leave your share to your own chosen beneficiaries through your will.

As tenants in common:

• Co-owners can own a home in different percentages. For example, their deed can state that they own the property 50-50%, or 80-20% — whatever ratio they’ve decided.  

• Nevertheless, the co-owners share rights to the entire property. (Disputes can arise when someone uses more than their own share.)

• An additional co-owner can come onto the deed at any time, as a new tenant in common.

• Each co-owner may use their personal wills to name beneficiaries to receive their share upon their death. Beneficiaries could be the co-owner(s). Or they could be someone else. The beneficiary would then co-own with the surviving original deed holder.

• Each of the co-owners may take out loans against their own stake in the home.

To end their tenancy in common, co-owners may use a quitclaim deed, or they may agree to buy each other out. You can do this yourself and have a real estate attorney go over your new legal instrument — that is, your new deed. Anticipate the local fees for recording legal documents.

In a few states alternative vesting types exist for couples, such as tenancy by entirety (TBE) or community property (with or without survivorship rights).

Remember this. With the tenancy in common, when one co-owner dies, that person’s share does not automatically pass to the other co-owner(s). Owners individually control how their share will get passed along upon death. Each one can leave their share to a beneficiary of their choice, using a last will and testament.   

It works this way. Say you and your partner each own your home, 50-50. If either of you die, then a 50% interest in the home would be transferred as shown in the will of the deceased co-owner.

How Your Co-Ownership Will Work in a Joint Tenancy With Right of Survivorship

Joint tenancy with the right of survivorship (JTWROS) is a legal type of ownership. It’s a co-ownership.

Some states already use joint tenancy with survivor’s rights as the default type of property ownership for couples who purchase a home together. JTWROS owners may be spouses, unmarried partners, relatives, or business associates, or friends.

JTWROS means:

• Two or more people acquire the deed on the same day. They co-own the property, with equal rights and duties, and equal ownership shares.

• The co-owners share responsibility for debts tied to the home as collateral.

• If an owner dies, the home can bypass probate. The share of the deceased owner goes to the surviving co-owners. Even with no will or beneficiary deed, the share passes immediately. This is the meaning of the right of survivorship.

A co-owner ends survivorship rights by selling or transferring their share, through a deed. Severing the JTWROS happens through either:

(a) An agreement. The co-owners agree to switch to a tenancy in common.

or

(b) A transfer to a new owner, who becomes a tenant in common with the remaining co-owners. This can happen without co-owner consent.

Note! Joint tenancy gives full rights to the surviving co-owner. So, even if the deceased owner wanted to leave the home’s value to someone else, the surviving co-owner may legally ignore that and keep full rights to the home.

When people get married, should the one who owns the home they’ll live in add their spouse to the deed? Learn more on Deeds.com.

When You Change From Tenants in Common to JTWROS, What Else Is New?

You can use a quitclaim deed to create your joint tenancy by titling the new deed with your names, as joint tenants with right of survivorship. The deed that transfers ownership now calls you joint tenants, and in this way you have established each co-owner’s rights to an equal, undivided share in the property.

You are now co-owners with survivorship rights. Keep a few practical points in mind:

• Your names haven’t changed. Your title insurance will not lapse in coverage.

• There should be no effect on the assessment of your taxable property value. Nevertheless, it’s wise to call the township’s revenue office and confirm this.

• Legally, you share full responsibility for the mortgage, for taxes, and for costs of damage or maintenance anywhere on the property (regardless of how you individually decide to cover these costs).

• If one of the co-owners stops paying for costs that they’d previously covered, the other co-owner will be on the hook.

• The co-owners should get one property tax bill. They’re jointly responsible for paying it.

The main aspects of JTWROS are equal ownership shares, and the way one co-owner’s share goes to the other, generally without the need for probate, after death.

At the End of the Day, Does Your Deed Suit Your Estate Planning Goals?

What your deed says overrides a conflicting will. So the correct vesting on a deed is a powerful way to ensure your goals and intentions are respected after your lifetime.

Do consult a professional to learn more about tax implications of the change before you do it, including distribution of capital gains. And be sure to check in with the local revenue office for more guidance on tax reporting for property owners and co-owners. Your financial advisor can guide you in planning out the way your estate will pass after your lifetime.