Tenants by the Entirety vs. Joint Tenants With Rights of Survivorship

Learn the Difference Between These Forms of Holding Titles

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Some intricate and crucial differences exist between tenants by the entirety and joint tenants with rights of survivorship. Yes, both are co-owners of property, but depending on which way they hold the title, they have different rights and protections. 

Tenants by the Entirety 

It is a special type of joint property ownership allowed only between a husband and wife. It's not recognized in all states.

Tenants by the entirety have rights of survivorship. When one spouse dies, the surviving spouse immediately becomes the sole owner of the property. The property passes outside probate rather than to the deceased spouse's heirs-at-law or under the terms of his last will and testament or living trust.

Neither spouse can terminate the tenancy or sell or transfer his ownership interest without the consent and permission of the other. A tenancy by the entirety treats both spouses as a single legal entity. Property owned this way is typically exempt from judgments obtained against one spouse for one spouse's sole debts or liabilities. These lawsuits and debts can't seize property from an individual who is not legally responsible for them -- the innocent spouse, who is part of the single ownership entity. 

A tenancy by the entirety is not usually the default form of ownership when an asset is owned by a married couple, except when the asset is real estate.

Depending on state law, this type of ownership might also be used for bank accounts and investment accounts. 

Joint Tenants With Rights of Survivorship

It is a type of joint ownership in which two or more people hold title to an asset together. Each tenant has an equal interest in the property. Two tenants would each have a 50-percent interest, and four would have a 25-percent interest each.

Regardless of their shares, all tenants are entitled to the use, possession, and enjoyment of the entire property. 

When one owner dies, the surviving owner or owners immediately become the new owners of the property, similar to tenants by the entirety. The property passes outside probate rather than to the deceased owner's heirs-at-law or beneficiaries under the terms of his will or living trust. 

But joint tenants are not considered a single legal entity as tenants by the entirety are. If one owner is sued, a judgment creditor can force liquidation of the property to satisfy the judgment. Of course, the tenants who are not parties to the lawsuit or debt must be compensated for their shares of the property. They would not lose their investments; the judgment creditor has no right to their interests in the asset.

This type of ownership can be used with bank and investment accounts, stocks, bonds, business interests and real estate. It's not typically the default form of holding the title when an asset is held by two or more people. They would usually take ownership as "tenants in common" unless they specifically choose this type of arrangement.