Joint Tenancy

Joint tenancy has been a popular way to own property primarily because it is a way to transfer property. It is one way in which two or more people can own real property together. Perhaps the popularity has been due to a large extent to a lack of knowledge of the disadvantages.
The outstanding characteristic of joint tenancy is that when one joint tenant dies, ownership passes to the surviving joint tenant or tenants. Usually it is a husband and wife who are joint tenants, but unrelated persons may be joint tenants. It is sometimes desirable for married couples to own checking accounts and motor vehicles as joint tenants in order for the surviving spouse to have prompt access to those items during settlement of the estate.
Advantages
• Fewer court proceedings are needed to clear up the survivor’s rights. Usually less time and costs are involved in proceedings to terminate a joint tenancy than in a probate. The proceedings to terminate joint tenancy between spouses have been reduced even further. The surviving spouse may obtain a merchantable title to real property in joint tenancy with rights of survivorship by filing the following documents with the County Clerk, as provided by Title 58 O.S., Section 912.
1. A certified copy of the death certificate.
2. An affidavit by the surviving joint tenant stating that the decedent named in such certificate is one and the same person as the joint tenant named in a previously recorded document by book and page where recorded.
The document itself satisfies this requirement as to recording information.
3. If property is held in joint tenancy other than only with the spouse, a waiver or release by the Oklahoma Tax
Commission of their estate tax lien must also be filed.
• It is easy to create a joint tenancy. Usually executing a deed naming all the parties is necessary, but the courts have been strict in requiring language to show that the grantor intended a joint tenancy and not tenancy-in-common. Use of the words “and/or” alone is insufficient to create a joint tenancy.
Disadvantages
• Very few farmers own all property in joint tenancy; therefore, if probate proceedings are required for part of the estate, much of the advantage of simplified legal proceedings is gone.
• Gift and estate taxes may be higher when property is held in joint tenancy than when property is held in one person’s name. For example, if a widowed mother puts her farm in joint tenancy with her son, a gift tax may have to be paid if the value of the child’s half interest is great enough. Then, when one joint tenant dies, the entire value of the farm may be subject to both federal and state estate taxes. However, the value may be reduced by the amount that the executor can prove was furnished by the surviving joint tenant in acquiring the property but contribution to the purchase price is sometimes difficult to prove. This may be costly. The marital deduction avoids this problem in cases where the joint tenants are married to each other. Once parents transfer property to a child in joint tenancy, they cannot change their minds. An individual may change his will at anytime.
• The child could sell his interest to the farm if he so desired.
• The joint tenancy can be severed by a judgment creditor proceeding against the land belonging to the joint tenant against whom he has had judgment.
• A parent holding title to property in joint tenancy with several children might have difficulty in mortgaging the property.
• The right of survivorship may create unfair distributional results. For example, if a widow or widower remarries,
places inherited property in joint tenancy with the new spouse, and dies before the new spouse, children may be disinherited. The property would belong to the surviving joint tenant and will eventually go to the surviving joint tenant’s heirs unless the survivor’s will designates otherwise.
• Conflicts may arise between the joint tenants concerning management of the property.
• Large estates held jointly may increase estate taxes compared to most alternatives.