Avoiding Probate: Joint Tenancy with Right of Survivorship

Mortgages
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Avoiding Probate: Joint Tenancy with Right of Survivorship

Do you need to be legally considered family for a JTROS to work? If I live in a state that doesn’t recognize same-sex marriage (e.g. South Carolina) are there specific considerations in deciding whether or not to title a property using JTROS?

Unlike heterosexual married couples, same-sex couples living in states that do not recognize their union cannot enjoy the benefits of tenancy by the entirety, the legal concept that allows co-ownership of property by husband and wife.  In South Carolina, however, forming a joint tenancy with right of survivorship (“JTROS”) can ensure the surviving spouse retains the home upon the other’s death without interference by the court or government.

Under normal circumstances, a homeowner’s ownership interest in real estate constitutes a probate asset and upon his or her death will become subject to probate proceedings in court.  The probate court will gather all of the deceased’s assets and all possible inheritors, including the deceased’s creditors to whom he or she owes unpaid debt.  After reducing the estate of the deceased by financial claims and other obligations such as estate taxes, the court will distribute the remainder of the estate to the rightful inheritors.  The process will often involve the interpretation of the will left by the deceased as well as evaluation of other evidence indicating a right to inheritance.

While the probate process is not necessarily cumbersome, it can potentially become a great source of stress, risk, time, and money, especially for same-sex couples.  Even if the will of the deceased stipulates that all of his or her property transfer to his surviving same-sex partner, such properties may be subject to claims from the creditors of the deceased, if he or she has unpaid debts, or from disputes from family members of the deceased regarding interpretation of the will and the right to inheritance.  Other than these risks, probate can also cost considerable amount in lawyer fees and consume months or even years for a resolution.  A deceased’s estate worth more than one million dollars will also have an estate tax attached.

JTROS allows the titled real estate to pass to the surviving joint tenant without the hassle of going through probate proceedings.  Unlike tenancy by the entirety that offers the same advantage of probate avoidance, JTROS does not require that the tenants be legally married.  Where other devices for probate avoidance such as living trust or new real estate deed cost significant amount of money to construct and involve many bothersome complexities, a JTROS does not cost much money and is easy to form, provided that strict guidelines are followed.

Until 1971, South Carolina statutorily limited the right of joint tenants to obtain a right of survivorship.  In 1971 repealed that limitation.  Section 62-2-804 of the South Carolina Probate Code provides that a joint tenancy, upon the death of one of the tenants, will convert and sever into a tenancy in common unless the instrument creating the joint tenancy clearly provides for a right of survivorship.  Although South Carolina amended its constitution in 2006 to ban same-sex marriage and civil unions, the amendment does not prevent private contracts between same-sex partners.  However, due to South Carolina’s belief that the right of survivorship unnecessarily encumbers real estate properties, the presumption in South Carolina’s courts favors interpretation towards tenancy in common in case of any uncertainty.  Therefore, in order to constitute a proper JTROS, the title to the home must contain clear language indicating a right of survivorship by the remaining same-sex partner.  A lawyer well-versed in property law should be able to draft the proper document, as JTROS remains the most simple and convenient form of homeownership protection against probate at least in South Carolina.

Rather than risking unnecessary battles in probate court or expending large fees to undergo deed transformation or trust formation, same-sex couples should discuss with each other and their lawyers about the possibility of creating a JTROS.

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