What Is Right of Survivorship and How Does It Work?


A senior consults with a financial advisor to ensure that her assets are protected by rights of survivorship.

A senior consults with a financial advisor to ensure that her assets are protected by rights of survivorship.

The right to survivorship refers to the legal principle that upon the death of a joint owner, the remaining owner(s) automatically inherit the deceased owner’s share of property or assets without having to pass through probate. Here’s how it works.

A financial advisor can help you ensure that your assets are set up to avoid the probate process.

How Right of Survivorship Works

The right of survivorship is a legal principle primarily associated with joint property ownership, particularly in joint tenancy and tenancy by the entirety.

In joint tenancy, co-owners possess equal and undivided interests in the property. If one joint tenant passes away, their share automatically transfers to the surviving joint tenant(s) without undergoing probate.

Similarly, in tenancy by the entirety, a form of ownership reserved for married couples, the entire property is jointly owned and the right of survivorship applies. This ensures that if one spouse dies, the surviving spouse inherits the property seamlessly.

Any changes, such as a co-owner selling their interest, can terminate the right of survivorship and therefore convert the ownership structure. This would require taking a different legal approach.

Legal advice is recommended to help you understand property ownership and survivorship rights, and how they can change based on jurisdiction and specific circumstances.

Joint Tenancy vs. Tenancy in Common

These two forms of co-ownership differ in key ways. Joint tenancy aligns with an equal ownership interest in the property and includes the right of survivorship. Upon the death of one owner, their share automatically transitions to the surviving owner(s).

Conversely, tenancy in common allows co-owners to hold varied percentages of ownership and it does not include the right of survivorship. Upon an owner’s death, their share goes to their heirs or as instructed by their will.

So, while both forms provide co-ownership, joint tenancy ensures automatic property transfer post-death. But tenancy in common that provides more flexibility in estate planning.

When considering between these two, practical considerations such as your long-term goals for the property, as well as your co-owner’s wishes and circumstances should be accounted for.

Community Property vs. Separate Property

A senior couple reviews the legal requirements for rights of survivorship.

A senior couple reviews the legal requirements for rights of survivorship.

Community property is the name for assets acquired during a marriage, owned equally by both spouses. Separate property, however, is solely owned by one spouse and is usually garnered before marriage or received as a gift or inheritance.

To provide a real-life scenario, if a couple purchases a house after getting married, that asset is considered community property. On the other hand, if one spouse inherits a piece of land from their family, that would be their separate property.

The crucial distinction between these two lies in the division of assets in situations such as divorce or death.

Application of these properties can vary greatly depending on state laws and the existence of a will or trust.

Separate property, for example, does not guarantee that the spouse will receive the property upon the death of the first spouse.

Right of Survivorship and Estate Taxes

The right of survivorship can significantly impact estate taxes.

Take, for example, a property under joint tenancy with the right of survivorship that gets passed on to the surviving owner. If that property’s value is significantly high at the time of passing, it could potentially be taxable, and thus burden the surviving owner.

In this scenario, considering the help of a financial advisor can provide a specific strategy to understand and potentially mitigate these tax implications. The tax you may owe will depend on where you live and where the property is located.

Alternatives to the Right of Survivorship

Right of survivorship is common in property ownership, but looking at one’s own specific circumstances, various other methods such as tenancy in common, tenants by the entirety and property ownership through trusts and wills could be considered.

Each of these alternatives has benefits and drawbacks. For example, trusts and wills provide more control over asset distribution post-death. They can allow owners to specify heirs and the timing of their property, offering particular benefits for complex estates or specific inheritance wishes.

The right estate planning strategy for you will depend on your individual circumstances.

Bottom Line

A senior couple consults a financial advisor about the rights of survivorship.

A senior couple consults a financial advisor about the rights of survivorship.

The right to survivorship can help joint owners of a property or assets bypass the probate process by ensuring a smooth and immediate transfer of ownership to the surviving owner(s). However, you should take note of the legal requirements and potential changes that could limit those rights.

Tips for Estate Planning

  • A financial advisor can help you properly plan your estate so that your assets are protected and your beneficiaries can avoid the probate process. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

  • If you’re starting your estate planning on your own, make sure you understand the common estate planning mistakes that many have made before you.

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