Estate Planning Tips: How to Choose the Right Type of Joint Ownership in Tennessee

When creating or updating your estate plan in Tennessee, understanding the role of joint ownership can be crucial. Joint ownership, whether of real estate, bank accounts, or other assets, can significantly impact how your estate is managed during your lifetime and distributed after your death. With that in mind, a Murfreesboro estate planning attorney at Bennett | Michael | Hornsby explains how to choose the right type of joint ownership in Tennessee to maximize the benefits in your estate plan.

Types of Joint Ownership in Tennessee

Co-owning property or other assets is relatively common for various reasons. Married couples typically choose to jointly own real property, bank accounts, and various other assets. If you have a business partner, you might co-own property with that partner. As you age, you may even decide to add an adult child to bank accounts or real property. The manner in which you choose to jointly own property or other assets is important. Tennessee recognizes three types of joint ownership, including:

    • Joint Tenancy with Right of Survivorship (JTWROS): In a joint tenancy with right of survivorship, two or more individuals own an asset equally. Upon the death of one owner, the decedent’s share automatically passes to the surviving owner(s) without going through probate which can save time, reduce legal fees, and provide immediate access to the assets. This type of joint ownership is commonly used for real estate and bank accounts. One of the primary benefits of joint ownership with rights of survivorship is the avoidance of probate. Joint ownership can simplify the management of assets. For example, a jointly owned bank account allows either owner to access funds, which can be particularly useful for paying bills and managing finances if one owner becomes incapacitated.
  • Tenancy by the Entirety: This form of joint ownership is available only to married couples. Similar to JTWROS, it provides that the surviving spouse automatically inherits the deceased spouse’s interest in the property. It offers protection from creditors, as the property cannot be sold or divided without the consent of both spouses. Tennessee presumes spouses intended to hold property in a tenancy by the entirety if no other tenancy is designated on the deed.
  • Tenancy in Common: Unlike JTWROS, in tenancy in common, each owner holds an individual share of the property. Rather than owning equally, however, the owners can set varying ownership percentages. For example, you might have three owners with one owning 50 percent and the remaining two owning 25 percent each. Although each co-tenant in a tenancy in common may not own an equal share, each owner retains the right to use and enjoy the property in its entirety. Upon the death of one owner, their share does not automatically pass to the surviving owner(s) but is instead distributed according to the deceased’s Last Will and Testament or state intestate succession laws if there is no Will. Tenancy in common is the default option for co-ownership of property in Tennessee unless the co-owners are married, meaning that a court will assume the owners intended to own as tenants in common unless the ownership documents specifically state otherwise.

Joint ownership can be a valuable tool in your estate plan, offering benefits like probate avoidance and simplified asset management; however, it is essential to understand the potential drawbacks and carefully consider how joint ownership fits into your overall estate plan. The type of joint ownership you choose will impact how you can use, encumber, and sell the property while you are alive as well as what happens to your ownership interest in the property upon your death. 

Contact a Murfreesboro Estate Planning Attorney 

If you have additional questions about which type of joint ownership fits best into your Tennessee estate plan, consult with an experienced Murfreesboro estate planning attorney at Bennett | Michael | Hornsby as soon as possible. Contact the team today by calling 615-898-1560 to schedule your free appointment.

 

Stan Bennett