What are roommates with the right to survive?
Joint tenants with right of survivorship (JTWROS) are a type of brokerage account held by at least two people, where all tenants have an equal right to the assets in the account and have the right to survive in the event of the death of another account holder. The concept also applies to real estate.
In this type of property, a surviving member will inherit the total value of the other member’s share of property on the death of that other member. In the case of such a brokerage account, all members of the account also have the power to carry out investment transactions within the account.
Joint tenants with right of survivorship (JTWROS)
Co-location is a concept of real estate law that describes the different ways in which a property can belong to two or more people at the same time. A JTWROS is a version of co-location which gives co-owners the right to survive. This means that if an owner of the property dies, his ownership will be transferred to the surviving owners. This avoids probate, which is the legal process where a person’s will is proven in court and accepted as a valid legal document. The property of the deceased owner cannot be inherited by any heir. The last living owner of the property will own all of the assets, and the assets will be part of his estate. In some cases, creditors who have claims on the assets of the owner of the deceased account can be settled using the assets of assets previously owned by the deceased owner.
This concept differs from a joint tenancy, in which the tenants have no right of survival, and therefore, when a tenant dies, his participation is transferred to an heir of his choice. A JTWROS is most often used between married couples, or between parent and child.
Creation of JTWROS
Creating a JTWROS requires owners to share what are known as four units:
- Potential co-owners must acquire the assets in question at the same time.
- Potential co-owners must have the same title to the assets.
- Regardless of the individual amounts that each owner donated or paid for the assets, each owner must have an equal share of the total assets, expressed in 1 / n percent, where n is the total number of owners.
- Potential co-owners must each have the same right to own all of the assets.
When one of these four units is not respected, a JTWROS will not be created and will instead be treated as joint tenants, a less restrictive form of co-ownership.
When creating a JTWROS account, the wording must be extremely clear, for example: “Mr. X and Ms. Y must be designated as joint tenants with survivorship rights, and not as joint tenants”. This is necessary because, in some jurisdictions, the words “shared” are automatically assumed to mean joint tenants.