Quick Answer
JTWROS and TBE pass automatically to survivors and skip probate; TIC passes through probate to the deceased's estate. TBE is limited to married couples and, where recognized, generally protects against a creditor of only one spouse (state-law exceptions apply). Community property with rights of survivorship (CPWROS) uniquely gives both spouses a stepped-up basis at the first spouse's death, not just the deceased's half.
How an account is titled determines who controls the assets, who can make transactions, and what happens when an owner dies. The exam tests four primary forms of joint ownership.
How Do the Four Ownership Forms Compare?
| Feature | JTWROS | TIC | TBE | Community Property (CPWROS) |
|---|---|---|---|---|
| Who can use | Any two or more people | Any two or more people | Married couples only | Married couples (community property states) |
| Ownership shares | Equal | Can be unequal | Equal (50/50) | Equal (50/50) |
| Right of survivorship | Yes | No | Yes | Yes (with WROS election) |
| At death | Passes to surviving owner(s) | Passes to deceased's estate | Passes to surviving spouse | Passes to surviving spouse |
| Probate | Avoided | Required (deceased's share) | Avoided | Avoided (with WROS) |
| Creditor protection | Weak | None | Often strong for one-spouse debts where recognized; state law controls | Varies by state |
| Step-up in basis | Deceased's share only | Deceased's share only | Deceased's share only | Both halves (double) |
Memory Aid:
- JTWROS = "Right Of Survivorship" (survivor gets all)
- TIC = "In Common" (your share goes to your estate)
- TBE = "By the Entirety" (married couples only)
What Is Joint Tenants with Right of Survivorship (JTWROS)?
- All owners have equal, undivided interest
- When one owner dies, their share passes automatically to the surviving owner(s)
- Bypasses probate; assets transfer by operation of law
- Any owner can typically trade in the account
- Not limited to married couples; any two or more persons can hold JTWROS
- Checks/distributions must be made payable to all owners
Key Exam Point: In JTWROS, each owner has an equal share regardless of who contributed the funds. If three people own an account as JTWROS and one dies, the two survivors each own 50%.
Exam Tip: Gotchas
- JTWROS vs TIC at death: JTWROS passes to survivors automatically (no probate). TIC passes to the deceased's estate (requires probate).
- Any owner can typically trade in the account, but checks and distributions must be made payable to all owners. Equal ownership lets any owner place trades; it does not let one owner unilaterally take a distribution or liquidate proceeds for themselves.
What Is Tenants in Common (TIC)?
- Each owner holds a specific, divisible share (e.g., 60/40 split)
- Shares do not have to be equal
- No right of survivorship
- When an owner dies, their share passes to their estate (not to the other owners)
- Each owner can sell, gift, or bequeath their share independently
- Requires probate for the deceased owner's share
Think of it this way: TIC is the "independent" form of ownership. Each person owns their piece outright. When they die, their piece goes where their will says, not automatically to the other owner.
Exam Tip: Gotchas
- TIC does NOT have right of survivorship. A deceased owner's share goes to their estate, not to the other co-owners. The deceased owner's will or intestacy laws control disposition, not the account title.
What Is Tenancy by the Entirety (TBE)?
- Available only to married couples (recognized in roughly half of U.S. states)
- Both spouses have equal, undivided ownership
- Right of survivorship (like JTWROS, but only for spouses)
- Both spouses must consent before either can sell, transfer, or encumber the property
- Where recognized for the property, generally protects against a creditor of only one spouse; state-law exceptions apply
- Dissolved by divorce, mutual agreement, or death
Key Exam Point: TBE differs from JTWROS because neither spouse can unilaterally transfer their interest, and where recognized, a creditor of only one spouse generally cannot reach the asset (subject to state-law exceptions).
Exam Tip: Gotchas
- TBE requires marriage. It is dissolved by divorce, mutual agreement, or death.
- TBE vs JTWROS creditor protection: In JTWROS, an individual creditor can pursue one owner's share. In TBE, where recognized, a creditor of only one spouse generally cannot reach the asset, though state-law exceptions apply.
What Is Community Property with Right of Survivorship (CPWROS)?
- Available only in community property states: AZ, CA, ID, LA, NV, NM, TX, WA, WI (plus AK as opt-in)
- Property acquired during marriage is owned equally by both spouses
- With WROS election, surviving spouse receives full ownership at death
- Provides a unique tax advantage: both halves of community property receive a stepped-up basis at the first spouse's death
Think of it this way: Community property means "what's earned during the marriage belongs to both." CPWROS adds the survivorship feature so assets pass directly to the surviving spouse without probate.
Exam Tip: Gotchas
- Community property stepped-up basis: Both halves of community property get a step-up at the first spouse's death. JTWROS only gives a step-up on the deceased's half. This is a significant tax planning difference.
- CPWROS is available in 10 states: the 9 default community property states plus Alaska, which is opt-in. Do not confuse with TBE, which is available in more states.
What Should You Check on Exam Day?
- Match each ownership form to what happens at the death of one owner and whether probate applies.
- Remember that community property alone gives a double step-up in basis; JTWROS, TIC, and TBE step up only the deceased's share.
- Confirm TBE requires marriage, both spouses' consent to transfer, and, where recognized, generally protects against a creditor of only one spouse (state-law exceptions apply).
- Confirm CPWROS is limited to the 9 community property states plus opt-in Alaska.
- Remember TIC is the only one of the four that requires probate for the deceased owner's share.