All About Joint Tenancy in Virginia
It is common in Virginia for couples to purchase a house and own it in joint tenancy or tenancy by the entirety. Tenancy by the Entirety is a form of joint ownership and like joint tenancy, but it is allowed only for married couples in Virginia. The wise and experienced know that marriage is not a 50/50 split but 100% of all you both have. Marriage is a legal contract making two people financially one with each other (to a certain extent). Thus, it makes sense for married couples and romantic partners to own a home in Tenancy by the entirety.
All For One and One for All: What is Joint Tenancy and Tenancy by the Entirety?
Essentially, joint tenancy is when two or more parties own 100% of something at the same time. It is an undivided interest in the property. In Joint Tenancy in Virginia, all owners must control equal shares of the property. This is as opposed to Tenants in Common, where two people may own 50% each, or four people own 25% each, or some other portion of the whole. In Tenancy by the Entirety, each married spouse owns 100% of the property.
When people own a house in joint tenancy, they own the entire house together. Since all people own 100% of the house, they are all 100% responsible for the mortgage, the upkeep, and the taxes. This is the same for Tenants by the Entirety except the owners of the property are two married persons.
Pro: Right of Survivorship.
In Virginia, when a property is owned in joint tenancy or tenancy by the entirety, it belongs 100% to all or both people, so when one owner dies, there is still another person(s) left who owns 100% of the house or property.
Pro: No probate.
There is no need to include the property in a will, and since the house/property is not willed to the other house owner(s) and cannot be distributed to a third party, then it does not go into probate. So long as there are no creditors with a claim against one of you, then the house automatically goes to the survivor(s).
Cons: You cannot force the other Co-Owner(s) to Will the house to someone you choose.
If you own a house with your spouse or others in joint ownership, you have no say what they do with the house when you pass. For example, they could sell it and move to Costa Rica, even if you ask them to consider giving it (or a portion of the sale proceeds) to your children or other loved ones.
Cons: Debts of the Co-Owner(s).
If your co-owner(s) has unpaid debts or obligations, creditors may attempt to force you to sell the joint property to settle their debts. Each state has their own rules regarding creditor rights. It is important to trust the person you own assets with regarding a joint tenancy situation. It is critical to understand what their financial situation is, both while they are living and the implications at their death. At death, if the joint owner has outstanding debts, and that debt is not paid by their other assets, it is possible the creditor might be able to force the sale of the asset to satisfy the creditor. This is particularly true if the late owner listed the property as a form of loan security.
Cons: Estate taxes do not disappear with Joint Tenancy or Tenancy by the Entirety; they wait.
The good news is that the joint tenant(s) who survive does not have to pay estate tax at that time. The unwelcome news is that when that surviving person dies, not only are their beneficiaries hit with a possible estate tax, but they might not have the estate protections that would have been available to the joint tenant…unless the survivor does some proactive and smart estate planning.
If you want to protect your property in joint tenancy, contact our Virginia estate attorneys to help you create a comprehensive estate plan. You can schedule an appointment at either our Williamsburg, Newport News, Virginia Beach or McLean offices by calling at (757) 645-3176 or 866-603-5976.