If you purchase property with another individual, be it a spouse, friend, family member, or business partner, you have to decide how you want to hold the property. One type of commonly used property right is joint tenancy. Check out some of the reasons that you should consider owning property in joint tenancy.
1. Joint Tenancy Lets the Surviving Owners or Owner Bypass the Probate Process
One of the most popular reasons that people hold property in joint tenancy is that it enables the surviving owner or owners to bypass the probate process if their partner passes away. If the surviving owner needs to continue using or living in the property, this is extremely useful.
For example, assume that Mark and Morgan decide to open a law firm together. They buy a property to use as their office space and hold it as joint tenants. Mark unexpectedly passes away; after his death, the property passes seamlessly to Morgan. Morgan just needs to fill out the appropriate paperwork to report Mark's death. Morgan wants to keep the business running. Because they held the office in joint tenancy, Morgan can continue using their office space without disruption while Mark's will is probated.
2. All of the Joint Tenants (Owners) Have a Financial Stake in the Property
All of the owners, also known as the joint tenants, have a financial interest in the property. If one of the owners takes out a loan against the property, all of the owners are responsible for the loan. Should the owners decide to sell the property or rent it for rental income, each owner is entitled to a portion of the profits.
It is important to note that all of the joint tenants have an equal interest in the property. If four siblings buy a home together, each sibling holds one quarter of the property right.
3. Joint Tenancy Protects the Surviving Owner
If you hold a property in joint tenancy, you must leave the property to the surviving joint tenants after your death. You cannot leave it to another family member or friend. Considering that some beneficiaries are surprised with how the deceased distributes assets after death, this gives the joint tenants peace of mind that their stake in the property will always be there.
4. Multiple People Can Hold a Property in Joint Tenancy
Joint tenancy is not limited to two owners. It is available to any individuals who want to own property together, regardless of their relationship. This characteristic is one reason that business owners like to hold shared spaces in joint tenancy.
If you have questions about probate law and how probate may affect your property holdings, contact a law firm like Moore, O'Connell & Refling PC.