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Co-Ownership Myths – III

Co-Ownership Myths – III

One of the most confusing aspects of estate planning is the numerous myths about co-ownership of property. Many people do not understand the differences between a tenancy in common and a joint tenancy with right of survivorship. Many people do not understand what a tenancy by the entirety is or was. Many people do not understand the differences between the common law forms of co-ownership and community property. Moreover, people may define their own forms of co-ownership by contract. This article discusses some of the many myths about the co-ownership of property.

Right of Survivorship Versus Will

There is a myth that a right of survivorship applies only if a co-owner dies intestate. The myth leads to the myth that a co-owner of a joint tenant with right of survivorship, or other similar co-ownership, can give away his or her share of the property in a will or trust. The myth is not true because, as a general rule, a right of survivorship prevents the property from being given away in a will or transferred to a trust. The only exceptions are where the co-owner survives all other co-owners to become sole owner, or where all co-owners die simultaneously, leaving each estate entitled to an equal share. Contrary to the myth, in general, the share of a deceased co-owner of a joint tenancy with right of survivorship, or other similar co-ownership, passes automatically to the surviving co-owner or co-owners even if the deceased co-owner provided otherwise in a will or trust.

There is a myth that a right of survivorship represents the only way that property in a joint tenancy with right of survivorship, or other similar co-ownership, can be transferred. The myth is not true because marital property in a joint tenancy with right of survivorship, or other similar co-ownership, can be severed by consent, divorce, dissolution, or annulment. The myth is not true because non-marital property in a joint tenancy with right of survivorship, or other similar co-ownership, can be severed by consent or by a co-owner’s selling or giving away his or her share during life. Severance of the co-ownership can also be forced by a creditor of a co-owner. If the creditor has attached the co-owner’s share, the whole property may be sold in order to collect that co-owner’s share of the property.

Community Property

There is a myth in community property states that community property cannot be put into a common law joint tenancy with right of survivorship. The myth is not true because community property is under the dual control of both husband and wife. A husband and wife may agree to put their community property in a joint tenancy with right of survivorship. The result, then, is that when a spouse dies, the deceased spouse’s share of the community property will automatically pass to the surviving spouse, rather than passing to the deceased spouse’s estate.

Your lawyer

It is wise to consult your lawyer when you want to make changes to, sell, or give away co-owned property. Your lawyer can help you avoid any misunderstandings stemming from the numerous myths about the co-ownership of property.

Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.