How a Joint Tenancy Can Affect Your Estate
Joint tenancy is a form of property ownership that often factors into estate planning. If two people own a piece of real estate, for example, they can either be joint tenants or tenants in common. Under the latter, a tenancy in common, each person separately owns his or her share of the property. Thus, when one co-owner dies, his share passes through his estate like any other property. But under a joint tenancy, when a co-owner dies, his or her share simply ceases to exist; the surviving co-owner (or co-owners) acquire full title immediately upon the deceased co-owner's death. Nothing passes through a will, trust or probate process.
A joint tenancy requires four conditions, known as the “four unities”: (1) the co-owners acquire the property at the same time; (2) the co-owners share identical same title to the property; (3) each co-owner has an identical share of the property; and (4) the co-owners have an equal right to possess the property. If any of these conditions are not met, or cease to exist, there is no longer a joint tenancy, but a tenancy in common.
Recently, the California Court of Appeals addressed a dispute over a joint tenancy that was dissolved shortly before one of the co-tenants died. The surviving co-tenant argued the joint tenancy remained in force. The probate court and the Court of Appeals disagreed. The case is discussed here for informational purposes only.
Woods v. McBeth
Timothy Woods II and Sandra McBeth were siblings. They co-owned several properties as joint tenants. In 2008, Woods sued McBeth to acquire sole title to the properties. About two years later, they signed a Settlement Agreement to end the litigation. The agreement required McBeth to convey sole title to one of the properties in Los Angeles to Woods. In exchange, he would pay her $25,000 and transfer sole title to her over five other properties.
Woods died in late 2010 before the settlement was fully executed. His widow, acting as special administrator for the estate, filed a petition in probate court to enforce the Settlement Agreement. McBeth objected. She argued that she and her brother remained joint tenants over the Los Angeles property at the time of his death. Therefore, as surviving co-tenant, she automatically acquired sole title.
The probate court rejected this argument. It held that although Woods failed to complete a deed formally disclaiming his interest in the Los Angeles property before his death, the fact the two siblings signed a Settlement Agreement stating their intent to end the joint tenancy was, in combination with other actions, enough to dissolve said joint tenancy. McBeth argued the joint tenancy should continue until her brother fulfilled the conditions of the agreement. But as the Court of Appeals noted in its decision affirming the probate court, that's an issue of contract law regarding the enforceability of the settlement. It had nothing to do with determining whether the joint tenancy existed.
While this was an unusual case, it shows the importance of clearly establishing (and dissolving) a joint tenancy to avoid postmortem confusion. As with any decision that may affect your estate, you should always consult with an experienced San Diego estate planning attorney before acquiring new property as a joint tenant. Contact the Law Office of Scott C. Soady today if you have any questions.