Joint tenancy is an option most often used by business partners, or couples, in order to share assets. The full legal name is "joint tenancy with rights of survivorship," or JTWROS. It simply means that both parties share possession of the assets and, in the event one individual passes away, the other will continue to own the asset.

Which Assets can be Shared?

Joint tenancy is possible for any property, including personal property and financial property. For example, brokerage accounts and bank accounts can all be owned through joint tenancy. Retirement accounts are an exception because of their unique tax status; if you would like to add a second beneficiary to a retirement account, the process is separated from a standard joint tenancy.

Why elect Joint Tenancy?

When you have an effective joint tenancy in place, each individual in a partnership can access assets without any hinderance. This means either a husband or a wife, for example, could execute a trade. Joint tenancy also helps avoid the process of probate when an individual dies. Since another party already has legal control of accounts or property, there is no need to go about the process of restructuring ownership.

Advantages and Disadvantages of Joint Tenancy

Joint tenancy allows two individuals to share ownership of assets. For example, business partners or spouses could both own bank accounts, brokerage accounts and real property. There are many reasons to enter a joint tenancy, but all of these advantages come with a few risks.


The primary advantage of a joint tenancy occurs when one individual dies. Ownership of the asset passes seamlessly to the other tenant, and no probate or legal process will be involved. While both parties are living, joint tenancy allows them equal access and control to assets. For example, if one owner is traveling and cannot access a bank account, the other owner can carry out essential functions.


Joint tenancy is literally sharing ownership. Once it occurs, it is difficult to divide the assets should a separation occur in the future. You must trust your partner in order to share ownership as well. If your business partner carries out a transaction without your approval, you have no authority to change the event. Further, if you pass away, the surviving tenant has complete control over the assets. They can sell, bequeath or do what they decide is individually beneficial.

Does a will or trust have any control over joint tenancy?

Joint tenancy occurs outside of a will or trust. Once you establish joint tenancy over an asset, you do not have authority to change ownership of that asset in the future without the other tenant's approval. For example, if you own a brokerage account with joint tenancy, it will pass to the other tenant after your death, even if you give other instructions in your will. However, if you and the other tenant have a joint will and are both deceased, then the instructions in your will can take precedence. In this case, both tenants have given their permission.

What are the capital gains problems with joint tenancy?

Assets owned under joint tenancy are subject to capital gains if they appreciate in value. Capital gains tax is charged on income earned through investments, and though the rate is different from other income taxes, it is still party based and based on an individual's income level. When an asset is owned by more than one party in a joint tenancy, the incomes of those two parties may be different. The capital gain is divided up based on a percentage of ownership in the property, and each party pays his or her respective capital gains tax. This can be favorable or unfavorable based on your individual circumstances.

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