Couple holding hands


“Keep it simple,” has always been my motto. In a complicated world, I do as much as I can to “weed out” the chaos and alleviate stress; however, there is such a thing as over simplifying, and that can lead to unintended consequences.


“Joint with Rights of Survivorship,” or “JTWROS,” is a type of ownership that affords two or more people equal ownership in an asset, which includes access. This type of ownership also allows for survivorship rights upon the death of an owner. In other words, upon the death of an owner, the asset is split equally among the other owners.


JTWROS is a very simple way to avoid probate and create continuity upon the death of an owner. These advantages are generally what appeal to many people; however, there can also be reasons why this type of ownership would not be appropriate. Here are a few to consider:


  1. All owners have equal access and responsibility: Generally, with a husband and wife, or business partners, this can be beneficial; however, we have seen instances where children add their name to the title to avoid probate. What they don’t consider is that if one owner is sued or divorced (e.g., the child), it is possible that the house now becomes part of the child’s assets to settle these events. In that case, it is possible Mom and Dad would be out of a home: not an ideal scenario.
  2. Unintended estate consequences: Eventual estate distribution intent could be lost through JTWROS titling. Assets titled in this manner will pass automatically to the surviving owner(s) despite the language in your Will or Trust. Frequently, a surviving spouse may obtain these assets, remarry, and name the new spouse as a JTWROS owner. The new spouse (and their children from the previous marriage) may receive assets that were intended to go to the deceased spouse’s children. This could result in a messy scenario, fraught with legal proceedings.
  3. Potential negative tax consequences: Individuals may gift up to $14,000 per year, to as many individuals as they wish, with no gift tax consequences. Adding a JTWROS owner may be construed as a gift, and thus subject the transferor to gift taxes. Although this is not as much of an issue today, due to increased Allowable Exemption Amounts, in larger estates it could create unintended gift tax consequences.


JTWROS titling has distinct benefits, but also potential disadvantages. Before making a decision to title an asset or account in any particular manner, consult your financial planner. When making these decisions, many factors should be considered in the context of your whole financial and estate plan.