Tenants by the Entirety vs. Joint Tenants With Rights of Survivorship
Both carry rights of survivorship
Some important differences exist between tenants by the entirety and joint tenants with rights of survivorship. Both are co-owners of property but they have different rights and protections depending on which way they hold the title.
Tenants by the Entirety
Tenants by the entirety is a special type of joint property ownership that's allowed only between a husband and wife. It's not recognized in all states.
Tenants by the entirety automatically have rights of survivorship. The surviving spouse immediately becomes the sole owner of the property when the other spouse dies. 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 so the property is typically exempt from judgments obtained against one spouse for his sole debts or liabilities. Judgment holders can't seize property from the innocent spouse who is not legally responsible for them.
A tenancy by the entirety is not usually the default form of ownership 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
Sometimes referred to as JTWROS, this 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. If there were two tenants, they would each have a 50 percent interest. Four tenants would have a 25 percent interest each. This is the case even if one of the tenants paid for all or most of the property.
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. 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 because 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.