Why You Should Create a Right of Survivorship
When planning your estate, it’s crucial to consider all potential tools and strategies to best protect your assets and ensure they’re distributed according to your wishes. One of these tools is the right of survivorship, a legal concept that can provide significant benefits to your beneficiaries.
Throughout this blog, we’ll break down what exactly a right of survivorship is, the different types of a right of survivorship, its benefits, and how to set one up.
What Is a Right of Survivorship?
The right of survivorship is a provision that can be included in your ownership agreement of a property or other assets. This states that if one owner passes away, their share of the property automatically transfers to the surviving owner(s). This process bypasses the probate court, making the transition smoother and faster for your loved ones during a difficult time.
Types of Right of Survivorship
Joint Tenancy With Right of Survivorship
The more popular type of right of survivorship, joint tenancy with right of survivorship (JTWROS), provides a survivorship right to the surviving joint tenants. In this arrangement, the property is equally owned by two or more individuals, and upon the death of one tenant, the property immediately passes on to the surviving tenant(s).
This happens irrespective of any provisions made in the deceased tenant’s will. The right of survivorship bypasses probate, the legal process that may otherwise delay the distribution of the deceased’s assets, making it a popular choice for couples and closely-knit family members.
Tenancy by the Entirety With Right of Survivorship
A less common way of setting up a right of survivorship is by tenancy by the entirety. This arrangement is intended for married couples, where each spouse has an equal interest in the property, and they can’t sell, lease, or will their interest without the consent of the other.
This type of ownership structure can be beneficial for married couples who wish to retain control over their property if one spouse dies. Kansas does not recognize tenancy by the entirety, but many states do, including Missouri, Oklahoma, and Illinois.
Tenancy in Common
In a tenancy in common arrangement, each tenant or co-owner has an undivided, equal interest in the property, and they can sell, lease, or will their interest without the consent of the other tenants. This option is most popular amongst non-married individuals who jointly own a property, such as business partners or family members.
Crucially, upon the death of one tenant, their ownership interest is not transferred to the remaining tenants. Instead, it becomes part of their estate and is distributed according to their will or, in the absence of a will, according to the laws of intestacy. Consequently, this type of ownership structure can be beneficial for those who wish to have control over the disposition of their property after death.
Benefits of a Right of Survivorship
A right of survivorship has distinct benefits to those estate planning, including:
- Smooth, automatic transfer of property upon death to surviving tenants.
- Bypasses the often time-consuming and costly probate process.
- Can preserve family property by ensuring it remains within the family unit.
- Can serve as a mechanism for reducing potential inheritance tax liability, as the value of the deceased’s estate may be significantly reduced.
How To Set Up a Right of Survivorship for Your Property
Typically, a right of survivorship is drafted as supplementary to a deed. If you already jointly own a property with one or more other parties, you’ll want to draft a new deed where you denote the other co-owning tenants as joint tenants with rights of survivorship (JTWROS). This ensures equal shares to each tenant upon your or another owner’s death. JTWROS is a great option for business partners, family members, and other cohabitating persons.
You can also move to set up a right of survivorship with tenancy by the entirety—an option primarily meant for married couples. This agreement will differ from JTWROS, as one spouse cannot sell their interest or share of the property without the other spouse’s permission.
Set Up Right of Survivorship at Landmark National Bank
The estate planning process is incredibly important but can be complicated and stressful. It is important that you consult with a professional legal advisor to determine how you want your assets to be distributed. One your estate plan is complete, our Landmark National Bank associates can assist in making sure your accounts are set up according to your written plan.
For help with properly setting up your bank accounts, feel free to fill out an online contact form. You can also call or visit one of our many branch locations, where you’ll find banking experts happy to help you.