Whether or not jointly held property (i.e. property held by more than one person) needs to go through the probate process depends on the type of ownership. Probate is the procedure of settling the estate of a person who has died. An estate consists of property that the deceased owned at the time of death. Probate re-titles the property, putting it into the name of the person who was chosen to receive the property, i.e. the beneficiary.
Types of Joint Ownership
There are three basic forms of joint ownership of property: tenancy in common, joint tenancy with right of survivorship and tenancy by the entirety.
Tenancy in Common - Subject to Probate
A tenancy in common is a form of ownership between two or more people. Each owner is entitled to the full possession of the whole property, and can sell their interest in the property without the consent of the co-tenant(s). At the time of death, a tenant in common can leave their interest in the co-owned property to an heir or beneficiary of a will. This property interest will be subject to the probate process.
Joint Tenancy with Right of Survivorship - Not Subject to Probate
A joint tenancy includes at least two people and each own an undivided interest in the property. Additionally, joint tenants have the right of survivorship which means if one joint tenant dies, the others will acquire the deceased's interest in the property. Property held by joint tenants with the right of survivorship is not subject to probate.
However, what happens if a joint tenant transfers an interest in the property to another person who isn't a joint tenant? The transfer of interest in the property to a nonjoint tenant changes the ownership to a tenancy in common and would be subject to probate.
Tenancy by the Entirety - Not Subject to Probate
A tenancy by the entirety is a special form of joint ownership shared by spouses. It has some of the characteristics of a joint tenancy with right of survivorship since each spouse inherits the property if the other dies. However, it has some unique characteristics such as both spouses, as a marital unit, own the entire interest in the property. Additionally, when one spouse dies it isn't treated as an event that passes title to the surviving spouse since the spouse already owns the title. For this reason, the property doesn't go through probate.
Questions for Your Attorney
You may want to ask your attorney the following questions:
- What is the best method of owning property with other people?
- What are the tax consequences of owning joint property?