Joint tenants vs. tenants-in-common

When talking to clients about estate planning, I always ask them about the title to their homes, cottages and revenue properties. The majority of people will respond with the names of the people who are "on title". However, when I ask whether the people on title are on as joint tenants or as tenants-in-common, they usually don't know. I'm often then asked, "does it make a difference?"

The short answer is yes, it makes a difference.

When a property is held in joint tenancy, the situation is what I refer to as "the last man standing". When one joint tenant dies, the entire property belongs to the remaining, surviving joint tenant(s). Whoever is the last joint tenant to die owns the property. Only that last person can use his or her Will to give the property to someone else.

For example, let's sayy Robert, Dean and Chris are joint tenants of a house. Dean passes away. Even though Dean would like to leave his share to his wife, he can't because he's a joint tenant. Robert and Chris then own the property. Robert dies. Chris now owns the whole property. Because Chris is the only name on title now, he can leave the property to his wife and children. There is nothing for Dean or Robert's families.

Tenants-in-common is a different story. In this arrangement, each person owns a half, or third, or some other portion that belongs only to them. They can leave their share to someone in their Will or sell it (never mind the logistical problems of trying to sell one third of a house).

To adapt our example above, let's say Robert, Dean and Chris are tenants-in-common of the property and each owns and equal 1/3. When Dean passes away, he leaves his share to his wife, Deana. Now the owners are Robert, Deana and Chris. Then Robert passes away and leaves his shares to his wife, Roberta. Now the owners are Deana, Roberta and Chris. In this way, each of the individual owners retains control of his or her share.

Between a husband and wife, a title is almost always held as joint tenants. This is so that when the first spouse dies, the other one will automatically own the family home without having to go through probate. Note that this is not always done in second marriages, depending on the situation.

The subject of names on title comes up at estate planning time because the type of ownership might affect your estate plan.

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