The legal term probate refers to the formal court process by which a person’s assets are to be distributed upon their death, according to their will. The probate process involves a series of filings and hearings presided over by a probate judge.
Important stages in the probate process include:
- Proving that the decedent’s will is legal and valid
- Identifying and appraising estate assets
- Managing the payment of any debts or taxes owed by the deceased person’s estate
- Carrying out the deceased person’s instruction with regard to the distribution of their estate to their heirs, including distributing real estate and personal property as defined by either the will or state law.
The probate process begins with a petition in the local probate court by the executor, who is the person designated in the will to handle the distribution of the estate. If the will did not name an executor, one will be appointed by the court. A hearing will be scheduled, and notice of the hearing will be sent to any named beneficiaries, which informs them of the date, time, and location of the hearing.
Why Would You Want to Avoid Probate?
The biggest advantage to avoiding probate is cost. Probate can easily cost from 3% to 7% or more of the total estate value.
Another advantage to avoiding the probate process is that the process can be complicated and time-consuming. Since probate proceedings can take up to a year or two to completely resolve all matters related to the decedent’s estate, the assets are typically “frozen” until the court decides on the distribution of the property. As such, avoiding the process can help resolve matters more quickly and efficiently.
An additional advantage to avoiding the probate process would be privacy. Wills and probate proceedings are matters of public record. If you would prefer to keep your affairs private so that people who are not involved do not know how your estate was distributed, you will need to distribute your estate through joint tenancy or some other estate planning mechanism.
What Is Joint Tenancy?
There are three popular types of joint ownership of property (which can include real estate, a bank account, a car, etc.):
- Joint tenancy, which provides for ownership of equal shares in property
- Tenancy in common, which allows ownership of unequal shares in property
- Tenancy by the entirety, which is essentially joint tenancy for married couples.
Each has unique requirements and features which can have important legal implications for all parties regarding the ownership and distribution of property after death.
Joint tenancy occurs when two more people purchase and hold equal title to the undivided interest shares in the entire property. In the case of a joint tenancy, each tenant has the equal right to use of the land, and each has the right to a share of the money derived from rents.
Joint tenancy is created when the following conditions are met:
- All tenants obtained the land at the same time (unity of time)
- The same document grants title to all tenants
- Each tenant has an equal interest in the land
- Each tenant can exercise equal rights to possession
All these conditions must be met. If they are not, a court may find that another form of joint ownership exists, usually a tenancy in common which will complicate matters.
Joint tenancy is unique because the shares of the deceased tenant go to the other tenant by right of survivorship. That means that the surviving joint tenant automatically has full ownership of all of the property upon the death of the other joint tenant. Because of the right of survivorship, the property never enters the probate process since its ownership is determined by law.
Note that because of the right of survivorship, the joint tenants cannot name a beneficiary to the property since it automatically goes to the other joint tenant upon the death of one joint tenant.
How Does Joint Tenancy Avoid Probate?
Because of the right of survivorship in any joint tenancy arrangement, there is no property to be distributed in the traditional sense, thus avoiding inheritance claims by the deceased tenant’s heirs. The surviving tenant automatically gains a share of the interest in the property held by the deceased tenant.
Keep in mind, however, that some states require the right of survivorship to be explicitly stated. Failure to do so can impact the smooth transfer of the deceased tenant’s share to the surviving joint tenant.
Additionally, in the remote likelihood that both tenants die simultaneously, care should be taken to ensure their wishes are understood as to the final transfer of property in the event of their deaths.
How Do I Claim the Right of Survivorship?
When the right of survivorship is not expressly claimed, the automatic transfer of the deceased tenant’s share of interest in the property to the surviving tenant might become complicated. To claim the right to survivorship, it is important that the title or the description of the title (i.e., “Joint Tenancy with Right Of Survivorship”) includes this right as to all surviving tenants.
If the right of survivorship is not claimed, then the automatic transfer of the property is not guaranteed, and their heirs might contest the deceased tenant’s share. If that is the case, submitting the property to probate will be necessary. Probate laws will apply, and the deceased tenant’s heirs may be entitled to the decedent’s share in the property instead of the surviving joint tenant.
How Do I Terminate My Right of Survivorship?
Sometimes, the parties in a joint tenancy may choose to give up the right of survivorship. That could happen in a case where they seek to create a tenancy in common instead or where they would like to name an heir for their share of the property. There are a few ways in which this can be done.
They can choose to contract for the elimination of the right to survivorship, which likely will lead to the creation of a tenancy in common, a method of ownership that does not include a right of survivorship.
An interested joint tenant can also eliminate the right to survivorship by selling their individual property interest. Any time a new party is added, a new type of tenancy must be created because the unity of time requirement for joint tenancy has been destroyed.
Finally, a court may deem the joint tenancy invalid, which would extinguish the right of survivorship.
Do I Need an Attorney for Issues with Joint Tenancy and Probate?
Creating a joint tenancy arrangement with the help of a local probate lawyer can be helpful. They can advise you about any nuances in your state regarding this type of joint ownership and help you understand how best to protect the legal interests of you and your co-tenants.
Property law and its implications can be complex, and your decisions can have long-term financial and legal consequences. If you are considering joint tenancy or facing related issues, consulting with a qualified property lawyer is strongly advised. They can help you understand the benefits and potential risks and guide you through creating or terminating a joint tenancy.
