August 2nd, 2019
Author: Michelle L. Vesole & Micah A. Bonaviri
We are often asked what it means to own an asset with another that involves a “tenancy.” In Maryland, there are three ways you can own an asset in the form of a tenancy with another:
- A joint tenancy with rights of survivorship;
- A tenancy by the entirety; or
- A tenancy in common
Although probate avoidance is often a driving force, it is important to understand the differences of these types of ownership interests and the impact they play in your estate plan as a lack of coordination may result in unintended consequences.
In a joint tenancy with rights of survivorship, co-owners have equal interests in an asset and, as the name suggests, have rights of survivorship. So, upon a co-owner’s death, his or her interest is then owned by the surviving co-owner(s) by operation of law, overriding what is provided in the Will or Living Trust for such asset. A significant benefit is that the asset passes at death instantly without the costs and delays of probate.
A tenancy by the entirety has similar features to the joint tenancy with rights of survivorship, except that the co-owners must be married. An additional benefit is creditor protection (with narrow exceptions) against either spouse’s individual creditors though not the couple’s joint creditors.
In a tenancy in common, however, each co-owner may have unequal interests in an asset. At death, a co-owner’s interest passes as provided in a Will or Living Trust, or under the laws of intestacy, to his or her heirs and not to the other co-owners by operation of law.
As a result of these differences, it is important to regularly review the titling of your co-owned assets to ensure that they pass upon your death as you intend.