What Is the Effect of Joint Tenancy on Florida Estate Plans?
When creating an estate plan, it's crucial to consult skilled experts from a Florida civil law firm to help you understand everything you need to know about the process. One of the areas where complexities can arise is the issue of jointly held assets. How you name an asset significantly affects whether it will be part of your probate estate when you die.
Jointly held assets also affect the probate administration process in Florida. Legal counsel puts you in a better position to understand these and other impacts of joint assets for informed planning. Before then, it's crucial to know about the different types of joint property ownership in Florida:
Tenants in Common
Tenancy is the default type of joint ownership in Florida. It means that if the ownership instrument doesn't specify the type of joint ownership, the law presumes the owners hold it as tenants in common. Each owner has a separate fractional share of the undivided assets, for example, a 55%, 25%, and 20% ownership stake where there are three owners.
Tenants in common can join or leave the arrangement at any time with the other owners' consent. While tenants in common share portions of the property ownership, they have no automatically assigned physical boundaries within the property. They have full use of the property as long as they remain tenants despite owning a portion of the property title.
Florida estate planning attorneys explain that this type of joint ownership ends when one of the tenants in common sells their stake through a partition action. If one of the two remaining tenants sells their stake to the other party, the tenancy in common ends, and a single tenancy agreement begins.
Joint Tenants with the Right of Survivorship
Under this joint ownership, each tenant owns an equal share of the property in a structure that resembles the tenants in a common ownership structure. However, if one of the joint tenants passes on, their ownership interest in the property automatically goes to the other joint tenant owners.
Tenants by Entireties
Property under tenants by entireties type of joint ownership can only be owned by a married couple. The ownership views the couple as a unit instead of individual owners. A benefit of the ownership is that the transfer of ownership to the surviving spouse is automatic without probate involvement, ensuring seamless continuation of property ownership within the family.
Joint Tenancy
Married couples are said to be joint tenants in their marital residence. However, other concurrent owners can enter the joint tenancy agreement if that is expressly stated on the deed. A joint tenant can sell their share of the property. However, unlike tenants in common, joint tenants always have an equal property share, meaning owners don't have the option of owning different stakes.
Once you understand the various types of joint property ownership, you can evaluate how the property will pass on to the other joint owners or beneficiaries upon your demise. All these factors are crucial in helping you avoid probate to secure your loved ones' future. Estate planning lawyers in Florida can help you navigate the legal complexities of estate planning.
Why Does It Matter How Jointly Held Property is Titled?
It's essential to remember a few things when considering how jointly held property is titled. It can impact your ownership and transfer rights while potentially subjecting your interest in the property to unnecessary risks.
Property owned as tenants in common must undergo probate to be transferred. Your share is undivided and doesn't get automatically transferred upon your death. Property owned as tenants by the entireties or joint tenants with the right of survivorship does need to go through probate to be transferred in the interests of the deceased owner.
If you wish to avoid probate for your estate, consider using these joint ownership titles in estate planning. Property ownership automatically transfers to the other owners at the time of death. However, they must make the transfer ownership official by submitting a copy of the deceased owner's death certificate to the relevant authorities.
What Are the Potential Problems of Using Joint Tenancy in Estate Planning?
While joint tenancy can help you avoid probate, it poses some potential challenges to the owners in estate planning:
- It could delay probate: If there is only one owner after the death of a joint tenant, the property reverts to tenancy in common ownership. If the surviving owner dies, the estate passes through probate for distribution.
- Possible unintended consequences: A beneficiary named in a Will for a joint tenancy might be disinherited unless they are one of the other joint tenants. Joint tenancy with the rights of survivorship overrules anything written in a Will.
- May be subject to taxes: Placing a non-spouse on your property as a joint tenant is like gifting half of the property value, which is subject to gift tax unless it's under gift tax exemption.
An Experienced Estate Planning Attorney Guiding You on Joint Tenancy Laws in Florida
Joint tenancy is often a practical approach to avoid probate while planning an estate. The procedures can be complicated, but you can avoid the potential pitfalls if you work with experienced lawyers from a reputable civil law firm in Florida. They can help you evaluate your options and advise on the most suitable estate plan to help you meet your needs and planning goals.
The Dellutri Law Group is an estate planning law firm with skilled and knowledgeable estate planning lawyers in Florida. We help clients who want to protect what they have worked hard for over the years to ensure it ends up in the right hands when you're gone. Call us at 800-391-4337 to schedule a complimentary strategy session.
