JT -v- JTFRS

In Michigan, two of the four ways to hold properly jointly are as “joint tenants” and “joint tenants with full rights of survivorship.” Although these two types of ownership are similar in name, they each carry unique characteristics which are important to consider when deciding which form of title to use.

Joint tenants. In a traditional joint tenancy, co-owners hold an equal and undivided interest in the property, with a right of survivorship. When a joint tenant dies, her interest does not transfer to her heirs. Instead, the entire ownership remains in the surviving joint tenant(s).

For example, if there are three joint tenants and one of the joint tenants conveys her interest in the property to a third-party, the original joint tenancy is destroyed. Then, third-party forms a tenancy in common with the remaining joint tenants collectively, who among themselves remain joint tenants. If there are only two joint tenants and one of them conveys his interest to a third-party, then the joint tenancy is destroyed. Then, the remaining former joint co-tenant and the third party become tenants in common.

Joint tenants with full rights of survivorship.  Adding the words “with full rights of survivorship” creates an indestructible joint tenancy. This lasts until all owners agree to transfer the property or one owner survives the others. Simply put, none of the owners have an immediate, absolute right of ownership to the property. They all have the right to use the property for as long as they live, and upon the death of all but one owner, the surviving owner takes the entire property.

This arrangement cannot be destroyed by one owner acting alone. A co-owner can transfer her right to use the property, known as the life estate, but the transfer does not change what happens to the property when one of the co-tenants dies. The surviving co-tenant takes the entire property upon the death of the other co-tenants. Only all owners, signing a deed together, can undo the joint tenancy with full rights of survivorship.

An indestructible joint tenancy could become a problem if one of you changes your mind about the transfer of the property. Hypothetically, what if a co-tenant decides she wants to give some of the property to someone else:

With a traditional joint tenancy, that co-tenant could transfer her half to whomever she wants, without the other co-tenants’ consent. She cannot take back the entire property from the co-tenants and give the whole thing to someone else, but she can transfer her portion, which permanently becomes the property of the recipient.

On the other hand, with an indestructible joint tenancy, that co-tenant could not transfer any lasting interest in the property. She could give away the right to use the property for as long as both she and the other co-tenants are alive, but that arrangement would obviously be temporary. That co-tenant could permanently transfer the property with the other co-tenants’ consent, but not by herself. Likewise, any of the other co-tenants could not permanently transfer the property without the others’ consent.

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Samantha M. McLeod | Associate Attorney

KALTZ Coulombe PLLC