Many of the assets we own are held in joint ownership with another person, typically a spouse or other family members. Types of assets commonly held in joint ownership with others include homes, real estate, bank accounts, and other investments. When it comes time to writing a will and engaging in estate planning, asset holder need to understand the different types of joint ownership under New York law and how it can affect the outcome of passing an estate through probate.
One of the most familiar forms of joint ownership in New York is known as joint tenancy with rights of survivorship and is very common between married couples for joint checking accounts, homes, and other property. Under this type of arrangement, assets do not need to pass through probate since the surviving spouse or person automatically receives the deceased’s property rights.
Under joint tenancy with rights of survivorship, each person has an equal and undivided share of the assets and is entitled to sell his or her share to another party. If a sale occurs, the joint ownership agreement becomes a tenancy in common and the assets lose some of the protections they otherwise would have enjoyed under a joint tenancy with rights of survivorship.
When assets are held in a tenancy in common, creditors are able to put liens on the property which can affect the share of other joint owners. Additionally, one individual can hold a greater share of the asset than the other, unlike joint tenancy where each person owns an equal share. Furthermore, when one shareholder passes away, the rights pass on to the individual’s heirs and not any of the other shareholders.
A third type of joint asset ownership in New York common enjoyed by married couples is known as tenancy by the entirety and often applied to home ownership. In fact, unless the dead to the real property specifies otherwise, home residences are automatically held in tenancy by the entirety in New York. Under this type of joint ownership, each spouse owns a 100 percent share of the home and cannot be sold or transferred without the other spouse’s permission.
Another advantage of tenancy by the entirety is that while the couple is still alive, creditors of one spouse cannot put liens on the home with the non-debtor spouse is still alive. If the indebted spouse passes away while the non-debtor spouse is still alive, the lien is extinguished and the home automatically passes to the surviving spouse.