A joint tenancy between a husband and wife is generally known as a tenancy by the entirety. Tenancy by the entirety has some characteristics different than other joint tenancies, such as the inability of one joint tenant to sever the ownership and differences in tax treatment.

What is a Tenancy in Common?

A tenancy in common is another form of co-ownership. It is the ownership of an asset by two or more individuals together, but without the rights of survivorship that are found in a joint tenancy. Thus, on the death of one co-owner, his or her interest will not pass to the surviving owner or owners but will pass according to his or her will or, if there is no will, by the law determining heirs.

How is a Joint Tenancy Created, and What Property Can Be So Held?

State law controls the creation of a joint tenancy in both real and personal property (real property is land and attachments to the land, personal property is generally all other types of property). For transfers to two or more persons who are not husband and wife, the deed or conveyance must expressly state an intention to create a joint tenancy by noting that the property will be held not as tenants in common but as joint tenants with rights of survivorship. For transfers of personal property, such as stock certificates, the simple letters "JTWRS" may be used to designate a joint tenancy.

A joint tenancy can be created in almost any type of property. Different types of jointly held property have different characteristics. Either joint tenant of a bank account usually may withdraw the whole amount on deposit, depending upon the way the account agreement is written. The signatures of all joint tenants are generally required in order to transfer or sell bonds and corporate stocks. All joint tenants, and their spouses, must sign deeds and contracts to transfer or sell real estate.

Is a Joint Tenancy an Adequate Substitute for a Will?

No! Only with a will can a person be certain that his or her assets will pass as intended. A will, properly written and executed, applies to all of the property of the maker for which he or she has not otherwise provided. Almost everyone should have a will, even though he or she has provided for property to pass by joint tenancy, beneficiary designation (as with life insurance, POD and TOD designations) or by a trust.

A joint tenancy is not a "catch-all," and applies only to the specific property described in the instrument creating the joint tenancy. Furthermore, while a joint tenancy does provide for survivorship upon the death of one of the joint tenants, no provisions are included for the disposition of the property upon the death of the survivor. In addition, the joint tenant who is intended to be the survivor may die first, frustrating the intent of the parties. A properly made will would attend to these and many other of life's uncertainties.

A joint tenancy is a present transfer of an actual interest in the property. Except for joint bank accounts, it cannot be revoked or reversed without the joint tenant's cooperation, and for real property the cooperation of the joint tenant's spouse is also required. Creating a joint tenancy with someone other than your spouse may result in a gift tax liability.

A will is revocable and may be changed as circumstances changes. It is the cornerstone of an effective estate plan.

Will a Joint Tenancy Avoid Probate Expenses?

To some extent, joint holdings will reduce probate involvement and expense. However, while joint assets will avoid the formal estate administration that is required when property passes under a will, other costs may well arise. Steps must be taken to reregister the assets in the survivor's name and to comply with the various state and federal tax requirements. The process is not as quick and easy, nor as inexpensive, as one might think. In addition, placing assets in joint names with another, especially someone other than a spouse, creates uncertainties and subjects the assets to the disadvantages discussed below.

*** This information is for informational purposes only.  Please consult an attorney for further information and advice. ***