Each tenant has an equal right to the account’s assets and is afforded survivorship rights if one of the account holder(s) dies. A surviving member inherits the total value of the other member’s share of property upon the death of that other member.1

Understanding Joint Tenant With Right of Survivorship (JTWROS)

Contrary to what some people may believe, the term joint tenant with the right of survivorship has nothing to do with being a lessee or tenant in a rental apartment. JTWROS is actually a legal concept that applies to individuals who own assets, accounts, or other types of property.. It is actually a form of co-tenancy, which is why this arrangement is also often called a joint tenancy.

Co-tenancy or joint tenancy is a concept in property law that is used to describe the various ways that a piece of property can be owned by two or more people at the same time. A JTWROS is one version of co-tenancy that gives co-owners equal rights to the asset in addition to the right of survivorship. This means that both parties can freely use the asset as they please. But if one tenant dies, their ownership stake passes on to the surviving owner(s).1

A JTWROS is most commonly used between married couples, or between a parent and their child. But it can also be established between parties who are not related. As noted above, this type of legal relationship can involve any number of financial accounts or assets, such as:

• Checking, savings accounts
• Mutual funds
• brokerage fund accounts

This relationship can be broken if one or more of the parties involved sells their interest in the asset to someone else. As such, it becomes a tenancy in common (TIC), which is a less restrictive form of joint ownership.3

All members of a brokerage account are afforded the power to conduct investment transactions within the account.

Requirements for Joint Tenants With Right of Survivorship

The creation of a JTWROS requires that the owners share what is known as four unities:

• The would-be co-owners must acquire the assets in question at the same time.
• The would-be co-owners must have the same title on the assets.
• Regardless of the individual amounts that each owner has given or paid for the assets, each owner must have an equal share of the total assets, given as 1/n percent, where n is the total number of owners.
• The would-be co-owners must each have the same right to possess the entirety of the assets.4

A JTWROS cannot be created if any one of these four unities isn’t established. The parties are then treated as tenants in common.

The language must be extremely clear when a JTWROS account is created. For instance, “Mr. X and Mrs. Y are to be designated joint tenants with rights of survivorship, and not as tenants in common.” This is necessary because a joint tenancy is automatically assumed to mean tenants in common in certain jurisdictions.

Joint Tenant With Right of Survivorship (JTWROS) vs. Tenancy in Common (TIC)

A joint tenant with right of survivorship differs from a tenancy in common. While each party in a JTWROS has a right of survivorship over the asset, those in a TIC do not have the same legal right. Unless otherwise indicated, this means when a tenant dies, their ownership stake is passed on to an heir or other beneficiary of their choosing.

While parties in a JTWROS must have an equal stake in the asset or property, tenants in common aren’t bound by this rule. Instead, this agreement allows parties to have different stakes in the property. For instance, three people may own a home together. If one individual has a 75% claim in the house, the other two are only able to have a 25% stake in the property.3

Unlike a JTWROS, there are several ways for parties to terminate a TIC. They include:

• Buying out the other party(s)
• Selling the asset
• One or more heirs selling their stake

Advantages and Disadvantages of JTWROS

There are a number of benefits to entering into a JTWROS. Despite these advantages, this type of arrangement does come with certain drawbacks. We’ve listed some of the most common advantages and disadvantages of being a joint tenant with right of survivorship below.

Advantages

Entering into a JTWROS avoids probate, which is the legal process where a person’s will is proven in court and accepted to be a valid legal document. The deceased owner’s heirs cannot inherit their property once a JTWROS is established. This means that the last living owner of the property owns all of the assets. They then become part of this individual’s estate.

Survivorship also provides the remaining party(s) with other benefits in addition to avoiding probate. Surviving parties are allowed to continue using the asset without any interference from outside parties, including a deceased party’s heirs.

Each party in a JTWROS must contribute to the property equally, in addition to holding an equal share and equal access to it. This means they must put in an equal share of any bills, such as property taxe maintenance, or repairs. This takes the burden off one individual and spreads it out between everyone in the relationship.

Disadvantages

The most obvious disadvantage is that individuals can’t pass or will their ownership stake to their heirs. Those who want to own property but don’t want to give survivorship to the other owner(s) shouldn’t consider this kind of agreement.

Everyone should ensure they have a stable and solid relationship before they enter into an agreement like a JTWROS. If relations between parties go south, it can impact the agreement.

Individuals should be sure they can afford the asset before they enter into a JTWROS. Financial strains can put a damper on the agreement, especially when one individual is doing their part. For instance, if one individual can’t keep up with their financial obligations to repair a home or make payments on a mortgage, it could have a negative effect on the other party.

The Bottom Line

Owning property on your own can put a strain on your finances. But you can lessen the burden by entering into a special agreement with someone else. This agreement is called a joint tenant with the right of survivorship. Not only does it give you and your partner an equal share in the asset, but you also share equal responsibility.

Keep in mind, though, that your share goes to the surviving tenant if you die, which means you can’t leave your share to any of your heirs. You may be better off becoming a tenant in common if you want to pass on your stake to someone else. Regardless of what route you take, be sure to consult a financial and/or legal professional to guide you.