Does it matter how you hold title to property?

By Attorney Truman Scarborough

We will be looking at joint ownership in this second part of a series of articles on the various ways title to property can be held. Joint ownership is commonly used so another person can access an account and/or avoid probate.

Probate can be avoided only if there are survivorship rights, where if one owner dies his/her interest goes directly to the surviving owner(s).  There are survivorship rights when property is held as Joint Tenants and when a husband and wife hold property as Tenancy by the Entirety.  However, with property held as Tenants in Common there are no survivorship rights.  This would be useful for a business where you wanted your interest to go to your family and not your business partner. Except for married couples, when there is no designation on how title is held, it will be as Tenants in Common without survivorship rights. If one of the Joint Tenant owners conveys his/her interest to a third party the asset is no longer held as Joint Tenants and now is held as Tenants in Common.

For a married couple to hold property as Tenancy by the Entirety, the husband and wife must acquire identical interests in property at the same time by one instrument that provides for joint ownership and control. With real estate all that is required is a deed to both spouses. But with financial institutions the spouses need to indicate on the forms that they want their accounts to be established as Tenancy by the Entirety. A divorce converts a Tenancy by the Entirety to Tenants in Common.

There are several issues to consider with joint ownership arrangements:


Tenancy by the Entirety provides additional protection from creditors. A judgment against one spouse will not encumber property owned as Tenancy by the Entirety.  This is not the case when property is held as joint tenants. Property held jointly can be reached by a creditor of just one of the owners.  This could result in owning real property with the other owner’s judgment creditor.


FIRST, if you can withdraw from a joint account without the other person’s signature, he/she likewise can withdraw without yours.

SECOND, with real estate the problem is reversed. The other owner must sign a deed or a mortgage with you and therefore has control over what you do with the property.


For capital gains taxes, the profit from a sale of appreciated property is calculated by subtracting the purchase price and other costs (called basis) from the sales price. When property is inherited at an owner’s death, the basis is stepped-up to the date of death value, reducing capital gains taxes. With jointly own property the stepped-up basis is only on the inherited portion. There is no stepped-up basis on the serving owner’s one-half interest. For example, if the jointly owned property had a basis of $100,000 the two owners would each have a basis of $50,000. If when an owner dies the value of the property is $200,000, the new overall basis is $150,000 with a stepped-up on the deceased owner’s one half from $50,000 to $100,000 and the original basis of $50,000 on the surviving owner’s one-half interest.

In the next article we will look at ways property can be held through different legal entities.

For further information you may be interested in Attorney Truman Scarborough’s Booklet on Estate Planning in Florida. It is available without charge or obligation by calling (321) 267-4770. Truman Scarborough’s office is located at 239 Harrison Street, in Titusville.