Whether done intentionally or unknowingly, owning property jointly with another creates an estate plan as to that property. Florida basically recognizes three (3) primary forms of joint ownership, each with their own set of advantages, potential disadvantages, and legal ramifications.
Tenants in Common. Tenants in common each own a separate percentage share of the jointly owned property, generally determined by the number of co-owners and the amount each co-owner contributed toward the property. There are no rights of survivorship with tenants in common, so each co-owner’s share passes at death per his or her estate plan. A creditor of a tenant in common only has a claim as to that person’s percentage share in the joint property.
Joint Tenants With Rights of Survivorship. With this type of joint ownership, on the death of a co-owner, his or her ownership interest in the joint property avoids probate and automatically passes to the surviving co-owner(s). Generally, to create a joint tenancy with rights of survivorship, the document creating the joint ownership must clearly specify “with rights of survivorship. A creditor of one joint owner may be able to convert the property to tenancy in common or force a sale of the entire property, but will generally only recover an allocable share of the proceeds based on the total number of joint owners.
Tenants by the Entirety. Joint ownership as tenants by the entirety is exclusive to married couples. The marriage must exist at the time the ownership is created, although property may be converted to tenancy by the entirety if all the required conditions exist. Tenancy by the entirety treats spouses as one owner, and generally the consent of both is required to sell or encumber the property. When one spouse passes away, the surviving spouse becomes the sole owner of the property. A creditor of only one spouse may not enforce the claim against the property. A creditor of both spouses may, however, try to collect the amount due against tenancy by the entirety property.
Although a tenant in common ownership is often presumed to exist when no other expression of intended structure is provided, contrary statutory presumptions exist with certain property, such as bank accounts, which should be understood before creating the joint ownership. Titling an automobile in joint names has risks in and of itself, but simply using “and”, or using “or” in the title designation has its own assigned ownership ramifications.
Taking title to property jointly invokes differing rights, limitations, and potential liabilities, based upon the property involved and which form of ownership is created. Before structuring any form of joint ownership, having an understanding of the laws and legal ramifications ahead of time can prevent future aggravation and potentially costly consequences.
If you need assistance in structuring joint ownership arrangements or need advice on which form, if any, of joint ownership is best suited for your particular objectives, at Bob Bible Law we have the knowledge and over 30 years experience to help you navigate these decisions.