Joint Tenancy
A form of co-ownership where two or more parties hold equal undivided interests in property with the right of survivorship, meaning a deceased owner's share passes automatically to the survivors.
What Is Joint Tenancy?
Joint tenancy is a co-ownership arrangement with a defining feature: the right of survivorship. When one joint tenant dies, their interest in the property passes automatically and outside of probate to the surviving joint tenants in equal shares. The arrangement is most commonly used by married couples and family members for residential real estate, bank accounts, and securities.
The Four Unities Requirement
Common law requires four unities to create a valid joint tenancy:
- **Unity of time**: all owners acquire their interests at the same moment - **Unity of title**: all owners receive title through the same instrument - **Unity of interest**: all owners hold equal shares - **Unity of possession**: each owner has the right to possess the entire property
Severance and Tax Treatment
A joint tenancy can be severed by one tenant's unilateral conveyance, which converts the relationship to tenancy in common as to that share. Severance destroys the right of survivorship for the affected interest. Joint tenancy avoids probate but does not avoid estate tax for taxable estates. The surviving joint tenant generally receives a step-up in basis only for the deceased's share, unlike community property which receives a full step-up. Joint tenancy may also expose the property to the creditors of any one tenant, which is why other ownership structures may be preferable for asset protection.