What it means
When two or more people own an asset together, the way they hold it decides what happens on death. Under joint tenancy, the owners hold equal shares and each has a right of survivorship, which means that the survivor takes the deceased person's share.
The phrase "with benefit of survivorship" is another way of stating that right in the title or account name. The main advantage is simplicity.
Because the asset passes directly to the survivor, it generally does not need to go through probate, which can save time and legal costs. A surviving spouse can often keep using a joint account or remain in the family home without waiting for a court.
There are important limits. The right of survivorship overrides what the will says, so a person who wants to leave their share to someone else cannot do so if the asset is held this way.
It can also cause problems for blended families, where a person may want part of the property to go to children from an earlier relationship. Other points to consider include creditors and tax.
The share of a deceased owner may still be counted for estate or inheritance tax, depending on local law, and a co-owner's creditors may be able to claim against the asset during their lifetime. Adding a person to a title as a joint owner can also have gift tax and control consequences.
The rules differ widely by country and by state, and the wording used on documents matters. Anyone planning to hold property in this way should talk to a lawyer or tax adviser who knows the local rules.
Documents should match the real intention of the owners. Finance professionals meet the phrase when opening accounts, arranging mortgages and handling employee benefits.
A bank will often ask how an account is to be titled, and the choice made at that moment can decide who receives the money years later. It is worth treating the account opening form as a planning document and not as a routine task.
In practice
Real-world examples.
Example
A married couple buy a home and take title as joint tenants with benefit of survivorship. When one spouse dies, the other becomes the sole owner without waiting for probate, and only needs to file the death certificate and some forms.
Example
Two siblings open a joint savings account to manage their elderly mother's finances. The account is held with benefit of survivorship, so when one sibling dies the other can continue to access the funds.
Example
A retired shop owner adds her adult son to her investment account as a joint owner with survivorship. Later, she realises that her will cannot divide the account between her two children, and she asks a lawyer to review her plan before anything else changes.
Case study
Seen in the real world.
Oakhurst Family is a fictional household and this case study is illustrative. Mr and Mrs Oakhurst owned a home worth $480,000 and a savings account of $90,000, both held with benefit of survivorship. When Mr Oakhurst died, the house and account passed directly to his wife within weeks, and she kept paying the household bills without interruption.
However, Mr Oakhurst's will had said that he wanted his daughter from an earlier marriage to share in his estate. Because the home and account were held with survivorship, they were not part of his estate, and the daughter received only the $30,000 that was held in his name alone. The illustrative lesson is that ownership wording and the will must be planned together.
Had the couple held the home and account as tenants in common, with each owning 50%, Mr Oakhurst's half would have been 50% x (480,000 + 90,000) = $285,000 and would have passed under his will. His daughter could then have received a share of that amount, and the couple's adviser later explained how a simple change in the title would have matched the plan to the family's wishes.
Watch out
Common mistakes.
- Assuming that a will controls jointly owned property, when survivorship ownership usually overrides it.
- Adding a child to a title for convenience without considering tax, creditors and loss of control.
- Believing that survivorship avoids all taxes, when estate or inheritance tax can still apply depending on the law.
Questions
People also ask.
What is the difference between joint tenancy and tenancy in common?
In joint tenancy the survivor takes the deceased person's share automatically, while in tenancy in common each owner's share passes under their will or the rules on intestacy.
Does it avoid probate?
It usually avoids probate for that asset, but other assets in the deceased person's sole name may still need to go through the process.
Can the arrangement be changed?
Often yes, by retitling the asset or in some places by a formal severance of the joint tenancy, but the owners should take legal advice first.
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