Methods of Ownership Transfer

How property is titled determines who controls it during life and who receives it at death. The four main forms of co-ownership each have different rules for survivorship, probate, creditor protection, and estate taxation.

Memory Aid:

• JTWROS = "Right Of Survivorship" (survivor gets all, avoids probate)
• TIC = "In Common" (your share goes to your estate, requires probate)
• TBE = "By the Entirety" (married only, both must agree)

Joint Tenants with Rights of Survivorship (JTWROS)

• Two or more owners hold equal, undivided interests in the property
• Upon death of one owner, their share automatically passes to the surviving owner(s) (this is the right of survivorship)
• Bypasses probate entirely; transfer happens by operation of law
• All owners must consent to sell or encumber the property
• Most common ownership form for married couples, but available to any combination of individuals (siblings, business partners, etc.)
• The deceased owner's share is included in their taxable estate (based on contribution to purchase)

Exam Tip: Gotchas

• JTWROS is not limited to married couples. Any two or more people can hold property as JTWROS. The marriage-only form is tenancy by the entirety.

Tenants in Common (TIC)

• Two or more owners; each owns a specified percentage (can be unequal, e.g., 60/40)
• No right of survivorship: when an owner dies, their share passes through their estate (via will or intestate succession), not to the other owners
• Each owner can independently sell, transfer, or bequeath their share without the other owners' consent
• Each owner's share is part of their taxable estate
• Subject to probate (the deceased owner's share goes through their estate)

Exam Tip: Gotchas

• TIC owners can have unequal shares and can sell independently. JTWROS owners must have equal shares and need unanimous consent.

Tenancy by the Entirety

• Available only to married couples (in states that recognize it)
• Similar to JTWROS but with additional protections:
  • Neither spouse can sell or encumber the property without the other's consent
  • Creditors of only one spouse generally cannot reach the property
• Automatically includes right of survivorship; bypasses probate
• Created by default in some states when married couples take title together

Exam Tip: Gotchas

• Tenancy by the entirety is the only ownership form with built-in creditor protection. A creditor of just one spouse generally cannot force a sale of the property. JTWROS offers no such protection.

Community Property

• Recognized in nine states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin
• Property acquired during the marriage is owned equally (50/50) by both spouses, regardless of who earned the income
• Property acquired before marriage or received as a gift/inheritance remains separate property
• Double step-up in basis: Both halves of community property may receive a step-up in basis at the death of one spouse (a significant tax advantage over other ownership forms)

Exam Tip: Gotchas

• The double step-up in basis is unique to community property. In other ownership forms, only the deceased spouse's half gets a step-up. Community property can save the surviving spouse significant capital gains tax.

Comparison Table