Joint tenancy with right of survivorship (“joint tenancy” or “JTWROS”) is just one of numerous ways multiple persons can hold title to real property. Different forms of holding title among multiple owners have differing legal ramifications, especially upon the death of one or more of the co-owners. Arizona adopted a new form of title called community property with right of survivorship. The latter acts the same as a basic joint tenancy except that it can exist only between a husband and wife in Arizona. The latter was authorized by the Arizona legislature to permit the benefits of community property to coexist with the benefits of joint tenancy title.
Joint tenancy is often referred to as the ‘poor man’s will’. The reason for that characterization is because when two or more people hold title as joint tenants the title held by the deceased joint tenant will automatically pass to the surviving joint tenant(s) without the necessity of a probate. Thus the costs and delays of probate are avoided. For instance, if a husband and wife own their house as joint tenancy, when the first spouse dies the title automatically vests in the surviving spouse. It is important to understand that a person’s written will has no effect on how property titled in joint tenancy will “pass” upon the death of a joint tenant. Joint tenancy operates separate and apart from one’s Will.
Here’s the catch. In the example just above where husband and wife (“H&W”) own their house in joint tenancy and the first spouse dies, the title does, in fact, vest in the surviving spouse. But, on the public record the only document that shows up is the original deed conveying the title to H&W as joint tenants. So what happens when the surviving spouse want to liquidate his or her interest in the house? The title company will search the public record and will want the other (the deceased) spouse to sign off on the paperwork selling the property. The surviving spouse will indicate that his or her spouse is deceased. But, what proof is there to evidence that fact on the public record? The answer, at that point, is there isn’t any. So, how can the title company insure that the “surviving spouse” is in fact the surviving spouse?
The answer to that question requires that upon the death of a joint tenant a document be prepared called an Affidavit Evidencing Termination of Joint Tenancy. It is a rather simple document indicating who the joint tenants were and that one of the joint tenants has died. A certified copy of the death certificate is attached to the Affidavit. That Affidavit, together with the death certificate is recorded with the county recorder’s office. Now the public record is cleaned up. The title now shows the surviving joint tenant(s) as the sole or remaining owner of the property. It’s quick and easy; no probate is required.
Joint tenancy may also be terminated by a joint tenant conveying his or her interest to himself or herself or a third person in some other form of title. For instance, if a brother and sister hold title to a rental property as joint tenants one of them may secretly convey her interest to her children. That conveyance breaks the joint tenancy. Or, the one joint tenant may secretly convey his interest to himself as a tenant in common. That too breaks the joint tenancy. Upon death the property will now go according to the written Will of the former joint tenants, if they have a Will. If they don’t have a Will, then it will go according to what the law mandates for distribution of one’s estate.
There are many advantages to using joint tenancy. But there are also many disadvantages using a joint tenancy title which will be the subject of another article. Before jumping to the conclusion that joint tenancy is the quick and easy panacea, one should absolutely understand the pros and cons of placing a title in joint tenancy or community property with right of survivorship.