Go to Jeff Salisbury LWGate Home Page.From: Rich Carreiro <rlcarr@animato.pn.com>
Subject: Re: joint tenants or tenants in common?
Date: Wed, 20 May 1998 23:37:28 -0400
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[Disclaimer: this is my opinion, not advice. I am not a professional.]
>i want to change my brokerage account to become joint owner with my
>wife. there are two choices for account type: joint tenants or tenants
>in common. what is the difference? pros/cons of each? any web resource
>links to help with this?
Joint tenants -- when you die your interest in the asset goes to the
other tenant. You cannot bequeath your interest.
I believe that you are both considered to have an
interest in the whole asset, so a creditor
of one of you could go after the entire asset, even
though it's partly owned by someone else. So if you
owed $50,000 and the asset was $50,000 (even if your
share of it was only $25,000), your creditor could
go after the whole thing.
Tenants in common -- You each have a separate interest in the asset.
You can will your interest to someone -- it will
not automatically pass to the other tenant. I believe
a creditor can only go after the interest of the
debtor. So if you owed $50,000, the asset was
$50,000 and your interest was $25,000, your creditor
could only go after your $25,000 interest.
Since you are talking about husband and wife, in some states you may
also have the option of Tenants by the Entireties, though it is
possible that it is only available for real property. It is sort of a
hybrid. Your share will will go to your spouse automatically on your
death, but I believe a creditor of either of you won't be able to
seize the asset because each of you are considered to own the whole
thing. For the creditor to take the asset from you, they'd also be
considered taking it from your wife, which they can't do because she
doesn't owe them anything. Obviously, if you and your wife give a
security interest in the asset for a loan or other consideration, the
creditor can move against it.
While I am sure of my answer with respect to how the property passes
at death, I am less sure about being correct about the debtor/creditor
issues. Definitely see a lawyer if your plans require you to be sure about
that sort of thing.
Rich Carreiro
rlcarr@animato.pn.com
P5-100/RedHat Linux 4.1
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