Rights of Survivorship

This guide will explain the role of the right of survivorship deeds in joint property ownership. And also provide insights and considerations from our estate planning experts. We’ll also explain the concept of the right of survivorship, which is essential to understand.

 

Pieces of information about Survivorship.

Suppose a property complies with the right of survivorship. In that case, the property’s co-owners can automatically absorb a deceased owner’s share if they survive them. In other words, the surviving owner will inherit the deceased owner’s share of the property in such a scenario.

Instead, if there are surviving owners, the share is directly distributed among them. Our simple guide to the survivorship provides a comprehensive explanation of this concept.

Note that not all properties grant a right of survivorship. This rule only applies when there are many owners of a property. The property’s ownership structure is crucial in determining whether owners have a right to survivorship. To start, examining the property deed is an excellent idea.

The right of survivorship is a characteristic of various joint property ownership types. Nonetheless, it can impact joint tenancy and tenancy in common differently.

 

How Does the Right of Survivorship Work?

When two or more individuals purchase a property together and include the right of survivorship in the property title. The surviving owner(s) will receive the part of the property that a deceased joint owner before owned. If one of the joint owners passes away, the other owner(s) inherit their share of the property.

The survivorship right remains in effect until the final surviving owner. Who will have acquired all shares of the property’s interest? At that point, the owner can make any decisions regarding the property and may leave it to any chosen beneficiary in their Will and Trust.

The individuals who own a property instituted the right of survivorship to preserve their ownership. The right ensures that the remaining owners do not have to give the property to someone outside the group of owners without their consent.

An example scenario could be when a married couple purchases a home jointly. In this case, both partners have an equal interest with the right of survivorship listed on the deed.

If one spouse were to pass away later on, the surviving spouse would gain full ownership of the property without any concerns. This means the deceased spouse’s share would not transfer to their child from a previous marriage or any other party.

 

What Types Of Deeds Contain Survivorship?

 

 

Three types of deeds contain a survivorship:

• Joint tenancy with the benefit of a survivorship
• Tenancy in the entire
• Community property that is entitled to the right to survivorship

Joint Tenancy with survivorship right. Joint tenancy is a frequently used form of co-ownership, where each owner holds the right of survivorship over the other owners. When an owner passes away, the surviving owners automatically acquire the property. The final surviving owner becomes the sole inheritor of the entire property.

Tenancy by the Entirety. Tenancy, in its entirety, is a type of joint tenancy that is exclusive to married couples. The consent of both spouses requires for any property conveyance. If one person passes away, the surviving spouse automatically inherits the property. Although not all U.S. states recognize tenancy, it is acknowledged in many.

 

Community property laws

Community Property with Right of Survivorship. Community property laws exist in nine U.S. states, including:

• Texas,
• California,
• Washington,
• And Arizona.

These laws treat a husband and wife as a unified economic entity.

 

What is a Survivorship Deed?

In technical terms, a right of survivorship is a type of co-ownership, not a form of a deed, despite references to a “right of survivorship deed.” Deeds are commonly named based on the warranty of the title they provide. In most states, however, it is sufficient to name the deed after the warranty.

 

Which States Recognize survivorship?

Most states recognize the right of survivorship for joint tenancy, where all property owners must list on the deed. However, community property allows for the right of survivorship for all involved parties.

Currently, some states that practice community property law include:

• Arizona
• California
• Idaho
• Louisiana
• Nevada
• New Mexico
• Washington
• Wisconsin
• Texas

 

How to Establish a Right of Survivorship?

Including specific language in a deed is necessary to establish a right of survivorship. If you have arranged a co-ownership agreement. It is crucial to create a new deed. This new deed should state the names of all co-owners and explicitly mention that the property is jointly owned as either joint tenancy or tenancy by the entirety.

In case you reside in a community property state, acknowledging the property as community property with the right of survivorship would suffice. However, ensuring that the deed contains unambiguous language indicating that the property is jointly owned with the right of survivorship is vital.

First, research to determine whether your state has specific requirements about the right of survivorship. For instance, some states may mandate a separate document outlining a survivorship agreement.

You can contact your county clerk or recorder’s office to determine the requirements to guarantee automatic property transfer to survive co-owners. Additionally, you can get any available forms or templates during this time.

Finally, sign your deed, collect the signatures of your co-owners, and get the signatures of any necessary witnesses.

 

What are Potential Drawbacks to Consider with the Survivorship Right Deeds?

Survivorship right deeds offer the benefit of avoiding probate and automatically transferring property interest to surviving co-owners. However, they have potential drawbacks to consider.

As a co-owner of a property with the right of survivorship, you cannot take any step against the property alone. You cannot sell the property or take out a mortgage. Leave it to a loved one without their consent. It is important to exercise caution when adding someone to the title.

Additionally, there is no clear division of interest, meaning that the economic circumstances of one owner can affect all other owners. For example, suppose you add someone to the property title. Which later goes through bankruptcy.

Try to avoid probate completely. However, the main advantage of having a right of survivorship is the ability to transfer property ownership without going through probate.

In this case, the property will become part of the owner’s estate and must go through probate upon their passing. Transferring the property into a trust is an option to avoid this situation.

Consider the tax implications of transferring property ownership. For instance, gifting property interest may result in gift tax liabilities. Additionally, a lifetime gift may result in forfeiting a stepped-up basis. Which could increase capital gains. It’s advisable to seek advice from estate planning and tax professionals to understand your tax obligations fully.

 

How can we Terminate the Survivorship?

If the survivorship right doesn’t work for you, fortunately, there are ways to terminate it actively. You can choose to sever the right of survivorship by recording a new deed. That deed indicates your interest in the title held as tenancy-in-common.

Tenancy-in-common refers to a scenario where multiple property owners can hold unequal interest shares in a property through separate deeds. With the ability to leave their shares to whomever they choose through a Trust or Will.

Once the right of survivorship is severed, all property owners become responsible for choosing an heir to their share of the property.

You can create a joint tenancy agreement to prevent terminating the survivorship right. All co-owners need to participate in this agreement and state that only one can terminate the right of survivorship by obtaining the express written consent of everyone involved.

 

 Alternatives to the survivorship.

Although multiple property owners may find survivorship convenient, it may only sometimes meet their specific needs. For example, suppose you co-own a property and want to exit your share of the property to your child. In this situation, the right of survivorship would not be useful in achieving your desired outcome.

If this situation applies to you, there are two options available. The first option is to avoid including the right of survivorship in the initial deed. Alternatively, you can collaborate with your co-owners to terminate the right of survivorship and establish a new tenancy-in-common agreement. By doing so, each co-owner would have the right to transfer their interest to their heirs upon death.

 

Bottom Line

You should integrate your property with your estate plan regardless of your chosen ownership arrangement. For example, if you and your spouse co-own a house, who will outlive the other is still being determined.

To prepare for this situation, you should proactively designate a beneficiary for your property. Even if there is a right of survivorship. If you pass away first, the right of survivorship will take precedence over your estate plan. But if you are the surviving owner, your estate plan arrangements will apply. Being prepared will provide peace of mind in either scenario.

After establishing the appropriate deed with a right of survivorship, remember to include it in your estate plan. Attorney Real Estate Group is available if you need help setting up, reviewing, or revising your estate plan.