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Whose Property Is It? Only Title Will Tell

Property can be owned jointly in many different ways — each with its own rules as to acquiring, holding and transferring the property.  Before acquiring major assets in joint name, it’s a good idea to consult with your advisers.  The chart below contains a summary of the different types of joint ownership and the estate tax treatment of each.

 

Tenants in common

Joint tenants with right of survivorship

Community property

Tenants by entirety

Number of owners allowed

Any number, interests may vary 

Any number, interests must be equal 

Spouses only

Spouses only

How created

Interests can be unequal; can acquire by purchase, gift, inheritance or sale of interest by joint tenant

Interests must be equal, acquired at the same time

Property acquired during marriage using "community" funds (AZ, CA, ID, LA, NM, NV, TX, WA, WI only)

Married couple elects to hold property as tenants by entirety.

Transfers of interests

Interests freely transferrable without consent of other owners

Joint owner may transfer interest during life; may result in tenancy in common

Consent of both spouses needed for transfers

Consent of both spouses needed for transfers

Who takes at death

Tenant’s interest passes by will or by state law for those dying without a will

Surviving joint interest tenants divide interest can equally so shares continue to be equal

Spouse’s pass by will. If left to surviving spouse, sheltered by marital deduction

Passes automatically to surviving spouse. Qualifies for marital deduction

Estate tax consequences

Fair market value of interest included in gross estate

Entire value of property included in estate unless gross joint tenant(s) can show full and adequate consideration paid for interest(s). If spouse is surviving joint tenant, only one-half value of property included in gross estate; sheltered by marital deduction

One-half value of property included in gross estate; qualifies for marital deduction if property passes to surviving spouse

One-half value of property included in gross estate; qualifies for marital deduction

Charity can be named a tenant in common of certain assets. 


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