What Happens To Jointly Owned Property In Probate?

Jointly owned property can be protected from probate concerns under some, but not all, circumstances. Whether property you hold alongside someone else will be protected from probate in the event of your death will depend to some extent on the structure of co-ownership that applies in your situation. To discuss how your jointly owned property may be handled in probate, and to consult with an experienced attorney regarding how jointly owned property may affect your Florida estate plan, call Loughlin Law, P.A. at 561-559-6214.

Types of Joint Ownership in Florida

All jointly owned property is not necessarily handled the same way in probate. Florida law provides for a few different legal mechanisms whereby the structure of shared ownership may be configured. Some types of joint ownership must be explicitly selected in the document establishing title to the jointly owned property,  whereas others may only be available under certain circumstances. Jointly held property may be treated differently in probate based on the type of joint ownership involved in a particular case, so understanding the types of joint ownership in Florida is an important step toward determining what may happen to any particular item of jointly owned property in probate.

The main types of co-ownership in Florida are:

• Joint tenancy with right of survivorship (JTWROS)
• Tenancy in common
• Tenancy by the entirety

Joint tenancy may also be structured without the right of survivorship, although in that case the joint tenancy loses some of its potential advantages. Each of the configurations entails specific rights regarding how the property may be transferred when any of the joint owners passes away.

Tenancy in Common

Under Florida law, co-owners are presumed to hold their shared property as tenants “in common” unless otherwise specified. Unlike tenancy by the entirety, tenancy in common is not limited to co-owners who share a specific type of legal relationship (i.e., marriage), so any parties who wish to own property together may do so under the rules of tenancy in common. However, tenancy in common does not automatically provide for a “right of survivorship” – a legal mechanism whereby the death of any co-owner of a jointly held property automatically transfers the decedent’s interest in the property to the surviving owner. Instead, the decedent’s share in the property becomes part of their estate.

The absence of any built-in right of survivorship means that each individual who co-owns a property as a joint tenant in common may have the right to leave his or her share in the property to beneficiaries via a Last Will and Testament, which means that in some respects tenancy in common grants individual co-owners significant flexibility over what happens to their shares in a jointly owned property in probate. On the other hand, however, this structure also means that a decedent’s share in a property that is held via tenancy in common will also typically have to pass through probate, and may be subject to a variety of claims during the probate process. Particularly when there are in fact significant claims against the decedent’s estate, the probate process for a deceased co-owner can sometimes complicate matters for the surviving owner or owners.

Joint Tenancy With Right of Survivorship

Like tenancy in common, joint tenancy with right of survivorship (frequently referenced as JTWROS) is available to any co-owners, regardless of any pre-existing legal relationship between them. Under the terms of JTWROS, when either co-owner dies, his or her share of ownership (known as “interest”) in the property automatically passes directly to the remaining owner – or owners, in which case the “right of survivorship” will typically mean that the deceased co-owner’s interest is evenly divided among the co-owners still living.

Joint Tenancy With and Without Right of Survivorship

Unlike tenancy in common, joint tenancy with right of survivorship in Florida only applies when the terms of the property title contain an explicit provision specifying the right of survivorship. Although Fla. Stat. § 689.15 provides for JTWROS to be applicable to personal as well as “real” property (i.e., land, often in the form of developed real estate), one of the most common means of establishing a “right of survivorship” provision is by inclusion in a deed.  Additionally, there are four “unity” conditions that must be met in order for JTWROS to be an option for jointly owned property in any particular case.

According to Cornell Law School’s Legal Information Institute (LII), joint tenancy is only an option when the “unities” of joint tenancy are in place:

• Unity of time – all owners acquire their interest in the property at once
• Unity of interest – shares in the property are evenly divided among the owners
• Unity of possession – shared control over the property and the rights thereto
• Unity of title – the legal document establishing ownership specifies “vesting” by joint tenancy

If any of these unities is lacking, then the property ownership will not generally be considered a joint tenancy.

Ensuring Right of Survivorship in a Joint Tenancy

To create a joint tenancy with right of survivorship – which in Florida is typically a major reason for establishing joint tenancy – one more “unity” besides the four listed by LII must be in place. This fifth unity, called “unity of survivorship, will generally need to be explicitly indicated in the legal documents that establish co-ownership of the property in question. Once incorporated in the appropriate document (often a deed), a “right of survivorship” specification ensures that when any of the co-owner’s dies, his or her “interest” in the property automatically transfers directly to the remaining co-owners in equal portions, bypassing probate. Absent the unity of survivorship, the property may be subject to probate, thereby frustrating one of the most common reasons for setting up a joint tenancy.

Tenancy by the Entirety

Unlike the other two forms of joint property ownership in Florida, “tenancy by the entirety” is a joint ownership structure available exclusively to co-owners who are legally married (to each other). Because only married couples can share a tenancy by the entirety, this form of joint property ownership is also limited to two owners, rather than being adaptable for three or more owners, as needed (very common in cases of joint ownership among siblings, for example). Tenancy by the entirety is in some respects similar to JTWROS, but according to the Florida Bar Association tenancy by the entirety adds a sixth unity, the unity of marriage, to the five required for JTWROS. Florida case law has historically presumed tenancy by the entirety for personal property (e.g., bank accounts) held in the names of both spouses, while real property, whose title is generally documented via a formal deed, must show evidence of the spouses’ intent to form a tenancy by the entirety.

As the Florida Bar explains, “by the entirety” also introduces some additional considerations that can make tenancy by the entirety situations complicated to navigate under circumstances. Some of these circumstances, such as a bankruptcy declaration by one spouse only, are not likely to arise in probate, but it is still wise for individuals who are weighing the implications of tenancy by the entirety for their state planning strategy to be aware of the underlying reason for these potential complications, which is that tenancy by the entirety, rather than separating joint ownership of a property into equal interests, constitutes a single, holistically shared right to the entirety of the property. In essence, what this means is that neither spouse owns any share of the property independently, nor can either transfer his or her interest to another party. Legally, this means that in some respects a property owned under the terms of a tenancy by the entirety is treated as if it is owned by the marriage, rather than shared by the individual spouses; a divorce, for instance, will convert a tenancy by the entirety to a tenancy in common.

Probate Implications for Jointly Owned Property

Each ownership structure comes with its own set of implications for probate. Depending on where you are in the estate planning vs. probate process, and how central the property you co-own is to your estate plan, you may wish to make changes to the way your joint. ownership of a particular property is structured, or on the other hand you may wish to make joint ownership central to your overall estate plan. A conversation with a member of the Florida estate planning team at Loughlin Law, P.A. may help you to evaluate your options.

Tenancy in Common Florida Probate Rules

As a general, individuals who are co-owners of a property via tenancy in common have the right to dispose of their individual interests in the property as they see fit, including by disposing of these interests in a Will. In some instances, however, the terms of a contractual agreement among the co-owners may limit how any individual owner may dispose of his or her interest in a property.

With or without additional limitations imposed by contractual agreement, an individual’s interest in property held by tenancy in common will typically be subject to probate. The absence of a lack of survivorship in this common form of ownership means that, although each co-owner enjoys considerable autonomy in how he or she disposes of individual interest, that interest will not be protected from creditors or other factors that might affect the property’s value during the probate process.

Florida Probate for Joint Tenancy With Right of Survivorship

Right of survivorship typically means that the deceased co-owner’s interest in the property passes directly to the surviving owner or owners. Property held under JTWROS will therefore generally bypass probate, although an individual co-owner’s interest in the property may be subject to the claims of creditors during his or her lifetime.

Bear in mind that, for real property in particular, the right of survivorship will typically need to be established explicitly. For personal property, Florida law does provide for a few exceptions to this general rule; the most notable of these exceptions is probably Fla. Stat. § 655.79, which establishes a presumption that joint bank accounts are intended to become the sole property of the surviving account holder (or holders) upon the death of any of the individuals named on the account.

Tenancy by the Entirety Probate Implications in Florida

Jointly owned property that is held by spouses under the rules of tenancy by the entirety automatically becomes the sole property of the surviving spouse when the other dies. As in joint tenancy with right of survivorship, this automatic transfer of property rights ensures that the jointly owned property is kept out of probate – although “by the entirety” has a somewhat different technical meaning, in that it essentially transfers full ownership by the marriage to full ownership by the remaining spouse.

Tenancy by the entirety may be applied to personal property as well as real property, so it can be an advantageous means of ensuring that a surviving spouse’s financial resources are not depleted by probate requirements. Outside the probate process, tenancy by the entirety can offer some protections against the claims of creditors for either spouse’s debts, although not necessarily for debts that are (like the property) shared between the spouses. A Florida estate planning lawyer may be able to help you determine whether tenancy by the entirety makes sense in your situation.

Speak With an Attorney

If you have concerns about how property that you share with someone else may be handled during the probate process, an estate planning attorney may be able to listen to the specifics of your situation and provide you with tailored guidance. At Loughlin Law, P.A., our estate planning team is prepared to answer complex questions regarding the transfer of jointly owned property so that Florida residents can make informed decisions. Call our office at 561-559-6214 to schedule.