This blog is geared towards those who are wondering what it means to have a right of survivorship, and how that may impact you if you are buying an asset, like a piece of property, with another person or several other people. Stated simply, a right of survivorship is the ability to obtain the full value of an asset, like real estate, when you survive a person with whom you own that asset. That being said, there are a number of important considerations that go into creating a transaction with a right of survivorship.
When you are considering purchasing property with someone else, the question “what does right of survivorship mean?” should be uppermost on your mind. That is because the right can impact what happens to the jointly owned asset when one of the owners dies before the other. Therefore, thinking about this topic, and working with an accredited estate planner, is important because the right of survivorship can have an impact on several facets of your life and the lives of those around you.
To Begin, What is the Right of Survivorship?
As noted above, if two or more individuals purchase a property together and both of their names are on the title or deed to the property, then each individual has a right of survivorship. That means that one individual takes the whole piece of property if the other dies first. The process is automatic. As soon as one individual dies, that deceased individual’s share of the property passes to the surviving person on the title.
That gives the surviving individual the ability to do what they wish with the property once he or she has full control over it. You can actually think of it as a type of automatic inheritance. Two people own something jointly, and when one passes, the other inherits the entire property themselves. This is a typical arrangement in marriage. A married couple jointly owns their house, and when one spouse passes, the surviving spouse gets full ownership of the house.
Why Have a Right of Survivorship?
One you have answered the question: “what does a right of survivorship mean?”, you can then understand that there are a number of benefits to having a right of survivorship.
First, it provides for the efficient transfer of property upon an owner’s death. The passing of property can be a cumbersome process, and after many years property can be difficult to trace. Accordingly, anyway in which property can be transferred easily, quickly, and efficiently is a net positive for the interested parties and the community as a whole. Therefore, having a right of survivorship whereby a joint owner takes full ownership of property upon the death of the other joint owner is incredibly efficient.
Second, a joint purchase with a right of survivorship ensures that property ownership remains within a family or business. Related to the interest in the efficient distribution of property, the right of survivorship allows property to stay within a group of people unless there has been an explicit change in the owner.
Third, the right of survivorship is rational and reasonable based on how we order our lives. Simply put, it just makes sense. If a married couple owns a piece of property, and one spouse dies, it would be unfair to force the surviving spouse to go to court or go through some other process in order to establish that she can continue living in her family home. The right of survivorship makes legal that which already makes sense, that the surviving spouse can continue to live in the home in which she has been living, likely for many years.
Fourth, the right of survivorship provides certainty, which can be particularly helpful with business planning. Companies desire certainty and stability. It allows a business to effectively plan for the future without having to account for too many variables. The right of survivorship can give a business that owns property the desired certainty and stability. When a business can expect to continue at a property even if one property owner dies, that allows the business to allocate costs and resources more effectively.
What Is the Difference Between a Joint Tenancy and Tenancy in Common?
Joint tenancy is when two people obtain an equal share of property with the same deed at the same time. By contrast, a tenancy in common is when more than one person owns a property and each may have different ownership interests in the property. Further, with a tenancy in common, the owners do not have to have purchase their share at the same time or on the same deed.
So, take our married couple example again. If they get married and then decide to buy a house together, then they will likely get a joint tenancy arrangement, which is articulated on the deed. They will each own an equal share of the property.
With a tenancy in common, however, you can have three owners of a property, Andy, Bob, and Carl. Andy and Bob could each own 25% of the property, and Carl could own 50%.
What happens when someone dies? A joint tenancy comes with a right of survivorship. So, as discussed above, the property automatically goes to the surviving owner. Tenants in common, however, have no right of survivorship. In the event one tenant owner dies, that property stays in that owner’s estate.
Work with the Accredited Estate Planner Attorneys at Doane & Doane
At Doane & Doane, we are top-notch, accredited estate planners. We are attorneys who understand how to effectively use estate planning to help you and your family into the future. We combine big firm resources and experience with the personalized attention of a boutique law practice. Our lawyers use the latest technical programs available to help our clients resolve their cases quickly and cost-effectively. At the same time, our entire legal team offers the one-on-one attention and support clients need to feel comfortable and confident about their case.
From your very first meeting, we want to give you personalized legal and tax counsel at a competitive cost. The lawyers at Doane & Doane assist individuals, families, and businesses with unique estate planning needs, such as business succession, tax planning, high net worth, and charitable giving planning by our West Palm Beach Estate Planning Attorneys. We are also, as noted, accredited estate planners.
We help our clients plan for the future by creating trusts, managing Medicaid goals and planning for the care of children and other loved ones. So, if you want to know what does right of survivorship mean for your family, we can help you answer that question for your specific circumstances. Call us at Doane & Doane today, at 561-656-0200.