What Marylanders Should Know about Joint Tenancy

Published on
October 12, 2023
Written by
Angel Murphy, Esq.
Category
Estate Planning

If you’re preparing to create an estate plan for the purpose of maximizing the value of your estate, you’ll want to familiarize yourself with certain terminology. Estate planning can involve all sorts of strategies – plans to ensure resources are direct toward specific causes or things (i.e. trusts), plans to hold property in particular ways, plans to invest resources along certain lines, and so forth. Marylanders should know at least a bit about property ownership in the context of estate planning; more specifically, they should know certain terms which tend to show up more frequently than others. In this post, we will discuss the concept of “joint tenancy” and how this term is relevant to estate planning.

Basics of Joint Tenancy

There are many different ways to own and hold real property (i.e. real estate). Real property can be owned with different “levels” of ownership – for instance, there is fee simple absolute, fee simple subject to a condition subsequent, and so on. There are also different types of ownership as well. Joint tenancy is a form of co-ownership in the owners each have an equal stake in the property itself (i.e. 2 owners will each own 50% of the property), and also the equal right to inherit the entire property in the event of the death of the other co-owner. In other words, if a property is held under a joint tenancy arrangement, and there are 2 co-owners, and one of those co-owners passes away during the joint tenancy, the surviving co-owner then receives the entire property. This is also referred to as “joint tenancy with rights of survivorship.” Given its characteristics, joint tenancy is commonly utilized by relatives or family members.

Joint Tenancy vs. Tenancy-in-Common

Joint tenancy is just one ownership type among others, as alluded to earlier. Knowing all the types can help Marylanders choose the proper arrangement for themselves. Joint tenancy is easily contrasted with “tenancy-in-common,” which can involve up to 35 co-owners. When co-owners hold real property as tenants-in-common, they may hold different ownership percentages, and they can also freely sell their ownership stake without disrupting the underlying structure. In other words, in an arrangement with 10 co-owners holding under tenancy-in-common, each co-owner has the right to simply sell his or her interest to another outside investor and “cash out.” This can be done while still preserving everything else about the ownership of the property. This is why tenancy-in-common shows up frequently in IRC Section 1031 contexts, because the ownership stake in a TIC is considered “real property” for purposes of 1031. This means that a TIC co-owner can sell his or her interest and then use the proceeds as part of a 1031 exchange.

Contact the Murphy Law Firm for More Information

There is plenty more to know when it comes to property ownership in the context of estate planning. If you want to know more, reach out to one of the leading family law attorneys at the Murphy Law Firm by calling 240-202-3270.

Angel Murphy

Personable. Passionate. Persistent.

Estate Planning | Maryland Law | Joint Tenancy | Inheritance Rights | Property Ownership | Family Estate | Tenancy In Common | Real Estate Investing | Estate Value Maximization | IRC Section 1031 | Co Ownership | Wills And Trusts | Financial Planning

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