Estate planning guide
Joint Tenancy and Your Trust
When a home is held in joint tenancy, survivorship usually beats your trust. How to line the two up.
The short answer
Usually, joint tenancy wins
Joint tenancy is one of the most common ways Southern California couples and family members hold title to a home. It comes with a right of survivorship: when one owner dies, the surviving owner automatically owns the whole property. That right generally takes priority over what a will or trust says.
In other words, if your home is still titled in joint tenancy when you die, your trust usually has no say over it. Here is why, what problems that can cause, and how to bring your title in line with your plan.
Joint tenancy is not wrong in itself. It is simple, and it avoids probate when the first owner dies. The trouble comes when it is left in place alongside a trust, because the two can point in different directions, and survivorship usually wins. The plan you signed may not be the plan that actually runs.
Why survivorship wins
A will or trust controls only property that passes through it. Property held in joint tenancy does not. At the moment of death, it passes to the surviving joint tenant automatically, by law. A will generally cannot end a joint tenancy, and a trust cannot control property that was never transferred into it.
A trust controls only what it owns
Signing a living trust does not change how your home is titled. If the deed still shows you and your spouse, or you and a child, as joint tenants, the home is outside the trust. That is why funding the trust, starting with a new deed for the home, is part of every plan. See our trust funding checklist.
Probate is delayed, not avoided
Joint tenancy avoids probate when the first owner dies. But once the survivor owns the property alone, nothing passes it on at the survivor’s death unless the survivor puts it in a trust or makes another arrangement. If that never happens, the property may go through probate after the second death.
Adding a child to the title
Some parents add an adult child to the deed as a joint tenant to avoid probate. It can backfire:
The child becomes a co-owner right away, so the child’s creditors, divorce, or bankruptcy can reach the property.
The child’s signature may be needed to sell or refinance.
Other children can be left out entirely.
The share given to the child during life may not receive the tax benefit an inherited home would.
A trust usually reaches the same goal without those risks. Our guide to choosing a trust or a will explains how.
Married couples and taxes
For spouses, joint tenancy can also affect income taxes. Community property can receive a full step-up in basis when the first spouse dies, while property held in joint tenancy may get it on only half. Our guide to the step-up in basis after a spouse dies explains the difference.
When both owners die together
If joint tenants die at the same time or close together, there may be no surviving owner to take the property. Each owner’s share can then pass under that owner’s will or under state law, often through probate. A trust lets you decide in advance where the property goes.
Bringing title in line with your plan
For married couples with a joint living trust, the usual fix is a deed from both spouses, as joint tenants, to themselves as trustees of their trust. Our office prepares that deed. For unmarried co-owners, such as siblings or partners, the choice takes more thought: moving a joint tenancy interest into a trust can change or end the survivorship arrangement, so both owners should decide on purpose what they want to happen when one of them dies. A joint tenant can also generally end a joint tenancy without the other owner’s consent, with a properly prepared deed.
Bank accounts work the same way
Joint bank and brokerage accounts usually pass to the surviving owner too, whatever your trust says. Review how each account is titled and who is named as beneficiary, so every asset follows the same plan.
Talk with us
Montanez Yu prepares complete estate plans for individuals and families throughout California, including revocable living trusts, wills, powers of attorney, and advance health care directives. Estate planning consultations are free, and every plan is a flat fee, quoted in writing before we begin. Call (951) 444-7407 or request a free consultation.
This guide is general information about California law, not legal advice for your situation. Reading it does not create an attorney-client relationship.