Florida law recognizes three basic types of joint ownership. Two are joint tenancy and tenancy by the entireties, which also has what is called a “right of survivorship.” The term means that, when one co-owner dies, the surviving owner automatically receives full, undivided ownership of the property. By definition, a co-owner who holds a partial interest in a tenancy by the entireties or joint tenancy with right of survivorship cannot transfer that interest to heirs through probate since the interest never becomes a part of the probate estate. Further, with a joint tenancy or tenancy by the entireties, the joint interests must be equal. The third type of ownership is the one without a right of survivorship and that can be transferred by way of probate. It is called tenancy in common. Instead of owning a property together, tenants in common each own a percentage interest that can be transferred. Florida law assumes a 50/50 split, but the percentages can be different if the owners decide otherwise. Consequently, a tenancy in common and Florida estate planning strategies can be utilized for various purposes when a right of survivorship is not the goal or outcome.
If an asset is owned by more than two co-owners, title is usually held as tenants in common, with each owner owning their respective percentages. On the other hand, tenancy by the entireties is reserved for married spouses only, and therefore by definition it is limited to only two owners. A joint tenancy, however, can include three or more joint owners. The result is that, when a co-owner dies, his or her interest merges with the interest of the remaining or surviving owners. For example, a joint tenancy with three owners, and one dies, there are now tow owners with a joint tenancy. The process continues until only one surviving owner remains. The last or final living owner thereby holds a complete and undivided title to the said property.
For purposes of understanding a Florida tenancy in common and estate planning, it merits saying that, although real estate is the most common example when discussing joint ownership formats, other types of assets can be jointly held as well. In the state of Florida, personal property, financial accounts, and many other types of assets be owned jointly as tenants in common, joint tenants with right of survivorship, or tenants by the entireties.
Also, in Florida, a tenancy in common ownership is presumed the default form of co-ownership. If a deed with more than one owner does not specifically state that the owners are tenants by the entireties or joint tenants with a right of survivorship, said owners are presumed to be tenants in common. Tenancy in common can also be created through the “destruction” of one of the other two types of co-ownership. Joint tenancies are destroyed if a creditor attaches the subject property in Florida or if one of the co-owners transfers an interest. In fact, transfer of an interest destroys a joint tenancy even if the transfer is from one owner to another.
Tenancy by the entireties in Florida is reserved exclusively for a married couple, therefore, it can be destroyed by divorce. If former tenants by the entireties are no longer married, they become tenants in common, with each having a 50% ownership interest unless a marital property settlement agreement states otherwise.
Joint tenancy with right of survivorship as well as tenancy by the entireties automatically convey ownership interests outside of probate thereby avoiding some of the time and expense related to probate administration in the courts.
Usually, a tenancy in common property interest is the only type of the joint interest types that goes through probate and can be transferred by way of provisions in a Last Will and Testament or through intestate succession (if there is no Will) following Florida law. As a result, if you own a 50% share of a property as tenants in common with another, you can bequeath or devise that 50% share to whomever you direct in your Last Will and Testament (Will), or it can go to your next of kin by way of Florida law if you have no Will. After the probate estate is administered, the designated beneficiary or heir or whatever number of them will then own a 50% interest or share (singularly or aggregately) in the property alongside your surviving co-owner as tenants in common.
Avoiding probate quite often appears to be a popular objective by many in estate planning. However, it is not the only goal. The use of a tenancy in common for Florida estate planning gives one more control over where your joint ownership interest eventually winds up. If you have a joint tenancy with right of survivorship and you die first, your co-owner now holds complete and undivided title to the property. Your beneficiaries or heirs do not receive an interest in it. On the contrary, a tenancy in common allows you leave your half of the Florida property to whomever you desire, including to the co-owner, if that’s what you wish to do.
Florida’s co-ownership options or alternatives allow for a few estate planning possibilities regarding conveying or transferring real estate or other property, while also raising various potential complications. All these can be addressed in more detail in a future article.
If you need assistance in Florida when doing, redoing, revising, orupdating your Estate Plan, please contact one of the attorneys of CASERTA & SPIRITI at your earliest convenience. We have many years of experience with Florida Estate Planning and can assist you in making the appropriate selections or changes which are best suited for your circumstances.