Understanding Joint Assets in New Jersey
If you’ve ever bought something with someone else, you may already understand the basic principle behind joint assets. In short, joint assets are assets (either tangible or intangible) that are owned by two or more people. Common assets that are often held in joint name include bank accounts, brokerage accounts, vehicles and real property. Enabling convenience for people in a close relationship, some jointly titled assets have the added benefit of avoiding probate (the process of adjudicating a will in court) upon the death of one of the joint asset-holders.
The state of New Jersey recognizes the following forms of joint ownership:
- Joint Tenants with Rights of Survivorship: If you own an interest in an asset with one or more other people as joint tenants with rights of survivorship (JTWROS) then upon your death the surviving joint tenant, or tenants, take title to your interest in the asset. They have rights of survivorship. This interest would not pass to your heirs or to the beneficiaries under your will, and the surviving joint tenants would not have to probate your will to acquire your interest. Your interest in this asset would pass to the survivors by law, by virtue of the title on the account.
- Tenancy in Common — The term tenancy is used because when these laws were created they primarily referred to real property — two people living in the same house as tenants together. If you hold an interest in an asset with one or more other people as a tenant-in-common then you and the other tenants hold an undivided interest in the entire property, and each of you have a right to use the entire property. However, upon your death, your interest in the property would NOT pass to the surviving tenants in common. Your interest in the asset would pass to your heirs (if you die without a Will), or to the beneficiaries designated in your Will.
- Tenancy by the Entirety — You might think this means three or more people owning something, but it doesn’t. Tenancy by the entirety is nearly identical to joint tenancy except that it almost always applies only to real property, and it always applies only to married couples and registered domestic partners. Upon the death of the first spouse (or domestic partner) the surviving spouse (or domestic partner) takes title to the entire property. The surviving spouse would not have to probate your Will to inherit the property titled as tenants by the entirety. A lawyer can help you take possession of property as tenants by the entirety.
Ownership by Joint tenancy and Tenants in common can be used to possess homes, vacant property, vehicles, checking accounts, savings accounts and other depository accounts. A lawyer can help you properly establish joint tenancy over a specific asset. For titled property (e.g., cars, boats, houses) it may be necessary for one person to transfer the property by deed or other instrument into both people.
If you don’t want another person to have access to your assets while you are alive, but you want to pass them to a certain person upon your death, you can, in some instances, opt for payable on death or transfer on death provisions in your depository accounts. If this is a concern, a professional can advise you regarding the advantages and disadvantages of these mechanisms as well as of other legal tools often used to achieve the same results (such as a trust).
For assistance with any phase of estate planning including wills, trusts and advanced medical directives in Hunterdon or Union counties, or elsewhere in New Jersey, call Alec Borenstein, Esq., at 908-236-6457 or email firstname.lastname@example.org to set up a free consultation. Many thanks to my colleague, Erin Calpin, Esq., for her help with this article.